Opr Still Accommodative Lower Than Pre Pandemic Says Tengku Zafrul

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Finance minister Tengku Zafrul Aziz says it is natural for prices to go up as the economy expands due to ‘pent up’ demand. (Bernama pic)KUALA LUMPUR: The overnight policy rate (OPR) is still lower than it was before the Covid-19 pandemic struck in 2020, finance minister Tengku Zafrul Aziz said.
“The OPR remains accommodative. It has increased, but remains lower than pre-pandemic,” Tengku Zafrul told a press conference at the Malaysian Banking Conference 2022.
He was responding to former finance minister Lim Guan Eng, who criticised the anti-inflation task force yesterday for being ineffective, citing the continued rise in the prices of goods.
Lim, who is also the DAP chairman, had asked if Bank Negara Malaysia (BNM) would have raised the OPR if inflation was under control.
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On Sept 8, BNM raised the OPR by 25 basis points (bps) to 2.50%, the central bank’s third consecutive rate hike.
Tengku Zafrul said the inflation rate stood at 2.8% in the first seven months of 2022, adding that this was much lower than any other country in the region, let alone in developed markets.
He also said it was natural for prices of goods to go up as the economy expands, due to higher and “pent up” demand.
“One shouldn’t be too focused on a certain agenda by choosing one number without putting things into context,” he said.
Asked about former prime minister Muhyiddin Yassin’s proposal for a special loan moratorium for small and medium-sized enterprises (SMEs), Tengku Zafrul said a blanket moratorium would not work.
He said this was because banks would need to support businesses that can survive.
He said the economic growth was assisted by a number of factors, such as loan growth, showing that banks have started to lend even more than before the pandemic, including to SMEs.
He gave an assurance that banks would provide a moratorium to companies that needed it, though this was ultimately for the financial institutions to decide.
“The government doesn’t own the banks, but we can encourage policies that assist (the people),” he said.
Yesterday, Prime Minister Ismail Sabri Yaakob said the proposal for the special moratorium would be discussed with Tengku Zafrul and entrepreneur development and cooperatives minister Noh Omar.
Muhyiddin, who is also the National Recovery Council’s (MPN) chairman, had called for banks to offer loan moratoriums for SMEs, especially those that were still struggling to recover post-pandemic. - FMT

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