Bank Negara proves economists wrong by maintaining OPR

Zeti, deputy Bank Negara governors Datuk Muhammad Ibrahim (left) and Datuk Nor Shamsiah Mohd Yunus at the press conference on the Bank Negara annual report 2013 and Financial Stability & Payment report 2013 on Wednesday.

WHEN Bank Negara hosted a media briefing on Wednesday for the release of its 2013 annual report, there was naturally quite a number of overnight policy rate (OPR)-centric questions. After all, the central bank has kept the OPR at 3% since May 2011. The OPR is the benchmark rate to which commercial banks refer to price their rates on deposits and loans.

In the second half of last year, a number of economists expected the central bank to hike the OPR by 25 basis points to 3.25% in the first half of this year against the backdrop of rising inflation due to the 20-sen hike in RON95 petrol and diesel prices in early September, the abolishment of the sugar subsidy in late-October and the hike in electricity tariffs from Jan 1 this year.