The Monetary Policy Committee (MPC) of Bank Negara Malaysia decided to reduce the Overnight Policy Rate (OPR) by 25 basis points to 1.75 percent. The ceiling and floor rates of the corridor of the OPR are correspondingly reduced to 2.00 percent and 1.50 percent, respectively.
Bank Negara Malaysia (BNM) cut its overnight policy rate (OPR) by 25 basis points (bps) to a record low of 1.75%
Including latest OPR cut, BNM has slashed the OPR four times so far this year for a cumulative 125bps reduction.
On Jan 22, 2020, BNM cut the OPR by 25 bps to 2.75% followed by another 25bps reduction on March 3 to 2.5%.
On May 5, BNM slashed the OPR by 50 bps to 2.00 and now witn the latest low cut rate of 1.75%.
The Impact of covid -19
The impact of COVID-19 on the global economy is severe. Global economic conditions remain weak with global growth projected to be negative for the year.
Although a trough is expected in the second quarter, broad-based weakness in labor markets and precautionary behavior by households and businesses could affect the recovery going forward and the pace and strength of the recovery, however, remain subject to downside risks emanating from both domestic and external factors.
Several major economies have begun relaxing measures to contain the COVID-19 pandemic, leading to the gradual resumption of economic activity.
The reduction in the OPR provides additional policy stimulus to accelerate the pace of economic recovery. The MPC (Monetary Policy Committee) will continue to assess evolving conditions and their implications on the overall outlook for inflation and domestic growth.
“The bank (BNM) will continue to utilize its policy levers as appropriate to create enabling conditions for a sustainable economic recovery,” BNM said.