KUALA SELANGOR: Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz has reiterated that it is not the government which decides the overnight policy rate (OPR).
Raising the OPR was determined by the Monetary Policy Committee (MPC) of Bank Negara Malaysia.
"Like any country, the government does not interfere with the decision on increasing OPR.
"So, I cannot confirm the allegations that the OPR will go up again," he told a press conference at Bandar Melawati bus terminal, here, today.
He also said there was a misconception that OPR hike had no direct impact on banks.
"When the OPR is increased, banks also have to pay a higher interest rate to depositors."
He said Malaysia had several controlled price items such as cooking oil and electricity with subsidies exceeding RM80 billion to control inflation.
"Therefore, our inflation which was at 2.8 per cent for the first six months, was lowest not only in the region but also one of the lowest in the world.
"When every country raises their OPR, investors will go to the one that gives (high) returns… OPR will also reduce inflation to some extent by reducing demand (thus preventing prices from going up)," he said.
He said the country's OPR was still be relatively low compared to other countries which saw a more than 200 basis points increase.
He said BNM had only increased the rate by 75 basis points, which is about 2.5 per cent, starting January.
"Is this high when we compare it to the country's strong economic growth, which was at 6.9 per cent in the first quarter and 8.9 per cent in the second quarter?
"Bear in the mind that OPR rose at least three per cent since 2013, till the pandemic hit. So, it's still low and the monetary policy is still accommodative," he said.