OPR increased from 2.25% to 2.5% because economy is stronger.
We have higher Fixed Deposit Rates. We have higher home loan repayments too.
These two are reasons why it’s not an easy decision to make; increasing the Overnight Policy Rate (OPR). Some people may be happy with higher fixed deposit rates. Some may now feel the pressure of paying higher for their home loans. In other words, if there is a chance that majority of everyone will fail to pay their home loans, do we still think that Bank Negare Malaysia (BNM) will increase the rate? This is why BNM says that the ‘economy is stronger.’
Do read in full what BNM said about the recent OPR increase. Full report from BNM here.
Future of economy Malaysia?
How BNM decides on the rate will also tell us their expectations too. Usually, the higher the rate, the higher the chances that people may prefer to put their money in the bank instead versus taking it out and investing it somewhere for higher returns. However, if the economy is growing strongly, then people will still prefer to invest their money versus leaving them in the bank because they have the confidence to invest.
This is why when the economy is not doing well, the central bank will reduce the rate so that people have less incentive to keep their money in the bank and will prefer to find other investments instead. This is how the economy could be encouraged to grow and this has been happening for a long time due to the effects from the COVID-19.
Ringgit reflective of the economy?
You can proceed to believe what you like to believe yeah. This is my blog so I tell you what I believe. If you believe ringgit is not doing well versus USD and thus the economy is not doing well, then please do google yeah. It also meant that all those advanced economies are all NOT doing well because USD has also become stronger versus all other currencies.
Whether it’s the AUD or Pound or Japanese Yen or the Euro, all these currencies are all doing badly versus the USD within the past 12 months. So, stop being fooled by people who are trying to sell you their product and services and just simply show you one currency and tell you all the gloom and doom.
By the way, read this whole article yeah. I did not say the Malaysian economy is super strong. However, our economy is definitely going stronger with every passing month. Malls are definitely patronised by more people. Visitors are definitely coming into Malaysia again. Exports are still growing because the whole world starts to recover as well. All these are happening. Until the next article, happy reading more from all sides and not being stuck with a super narrow view of some opportunists.
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