Understanding Bank Negara’s move

Bank Negara building

BANK Negara trampled market expectations by raising its key overnight policy rate (OPR) by 25 basis points (bps) to 2% from a record low of 1.75%. Market participants mostly projected that the first rate hike would happen in July.

To put things into perspective, the OPR was trimmed from 3% in the beginning of 2020 due to the already existing geopolitical tensions between the China and the United States, slower-than-expected growth of major trading partners, and dim spots in the domestic economy.