Higher OPR signals further cost-of-living squeeze

One cannot help but worry about the degree to which the OPR hike could dampen domestic growth momentum; or the degree of socio-economic pain it could inflict given the scars left behind by Covid-19.

ON May 11, Bank Negara’s Monetary Policy Committee (MPC) decided to hike the Overnight Policy Rate (OPR) to 2% from 1.75%. As the OPR determines the rate of interest that financial institutions charge each other for overnight funds, the hike means higher borrowing costs.

The MPC, in explaining its decision, pointed towards firming domestic growth.