Banks gain from rate hikes but face headwinds

In Malaysia, on May 11, Bank Negara decided to increase the overnight policy rate (OPR) by 25 bps to 2%. Prior to this, and due to the Covid-19 crisis, the OPR was reduced by a cumulative 125 bps to an all-time low of 1.75%, mainly to provide support to the economy in times of great uncertainty.

INTEREST rates are rising everywhere as central banks around the world are seeking to contain inflationary pressures.

Following the US Federal Reserve’s decision to hike interest rates by three-quarter of a percentage point or 75 basis points (bps), pressure has mounted on other central banks to raise rates.