PETALING JAYA: Bank Negara Malaysia (BNM) has slashed the overnight policy rate (OPR) by 50 basis points to 2%, its lowest level since 2010.
In a statement, the central bank said the ceiling and floor rates of the OPR corridor have been correspondingly reduced to 2.25% and 1.75% respectively.
Earlier today, Bloomberg reported that the OPR rates were set to be reduced from 2.5% based on a survey of economists.
BNM said Covid-19 and measures to contain its spread had affected global and local economic conditions and disrupted economic activities.
“The movement control order (MCO), while necessary to contain the spread of the virus, has also constrained production capacity and spending. Labour market conditions are also expected to weaken considerably.
“Economic conditions will be particularly challenging in the first half of the year.”
It said Putrajaya’s fiscal stimulus measures would offer some support to the economy while the easing of MCO restrictions should allow the slow improvement of economic activity.
But, it said, the outlook for growth remained highly uncertain due to developments surrounding Covid-19, while inflationary pressures are expected to remain muted.
“With the decision today, the OPR has been reduced by a total of 100 basis points, complementing other monetary and financial measures by BNM as well as fiscal measures this year.
“Together, these measures will cushion the economic impact on businesses and households and support the improvement in economic activity.”
BNM said it would continue to monitor the outlook for domestic growth and inflation, and use policy levers when needed to create enabling conditions for a sustainable economic recovery.
Source :- Free Malaysia Today