Malaysia central bank’s surprise rate hike will dampen market sentiment: economists

MALAYSIA’s central bank made an unexpected move to raise its benchmark interest rate on Wednesday (May 11), which came as a surprise to economists who feel the move could hurt market sentiment and slow down the pace of economic recovery.

At the end of its third monetary policy meeting of the year, Bank Negara Malaysia increased the overnight policy rate (OPR) by 25 basis points to 2 per cent. This was predicted by just 5 out of 19 economists polled by Bloomberg ahead of the announcement.

The OPR has stayed at a record low of 1.75 per cent since July 7, 2020. Over the course of the Covid-19 pandemic, the OPR was reduced by a cumulative 125 basis points as part of efforts to support the economy.