BNM confirmed reducing OPR up to 1.75%

KUALA LUMPUR 7 July - Bank Negara Malaysia (BNM) has decided to reduce the overnight policy rate (OPR) by 25 basis points to 1.75% today. 

The rate reduction to record low correspondingly reduced the ceiling and floor rates of the corridor of the OPR to 2% and 1.5% respectively.

BNM in a statement today said, the impact of COVID-19 on the global economy is severe.

Thus, the reduction in the OPR provides additional policy stimulus to accelerate the pace of economic recovery.

It added, the economic activity contracted sharply in the second quarter of the year due to measures introduced to contain the pandemic globally and domestically. 

“Following the gradual and progressive re-opening of the economy since early May, economic activities have begun to recover from the trough in the second quarter. The fiscal stimulus packages, alongside monetary and financial measures, will continue to underpin the improving economic outlook.

“The projected improvement in the domestic economy is expected to be further supported by a gradual recovery in global growth conditions. The pace and strength of the recovery, however, remain subject to downside risks emanating from both domestic and external factors,” said BNM. 

BNM at the same time foresees inflationary pressures to be muted in 2020 primarily reflecting the substantially lower global oil prices.

“The risks of a broad-based and persistent decline in prices are assessed to be limited as economic activity resumes and demand conditions improve.

“Underlying inflation is expected to be subdued and within expectations,” it said.

Nevertheless, the outlook remains significantly affected by global oil and commodity prices.

“The MPC will continue to assess evolving conditions and their implications on the overall outlook for inflation and domestic growth. 

“The Bank will continue to utilize its policy levers as appropriate to create enabling conditions for a sustainable economic recovery,” BNM concluded. - DagangNews.com