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Friday, July 11, 2014

Interest rate raised to 3.25%

As expected, the meeting today had an outcome...Bank Negara Malaysia decided to raise the Overnight Policy Rate (OPR) to 3.25%. The 25 basis points increase is the first in 3 years and has been expected by the market.

The floor and ceiling rates of the corridor for the OPR has increased to 3% and 3.5% respectively.

The Monetary Policy Committee believes that the country economy is going for a steady growth part.

As to inflationary pressures, it said inflation has been relatively stable as the effects of the price adjustments for utilities and energy continue to moderate.

Demand driven inflation remains contained.

“Looking ahead, inflation is, however, expected to remain above its long-run average due to the higher domestic cost factors.”

The increased in OPR will eventually effect commercial banks' Base Lending Rate. It will be interesting to see how the effect will impact the household in the country.

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