PETALING JAYA: Malaysians may find it easier to access loans and enjoy more disposable income as Bank Negara maintains the Overnight Policy Rate (OPR) at 2.75%.
But this relatively low OPR rate presents both opportunities and challenges for the economy, requiring careful planning and strategic decision-making.
Experts said that the decision to hold the OPR steady signalled a stable monetary environment, offering relief to borrowers with variable-rate loans and potentially stimulating consumer spending.
However, navigating the situation requires careful navigation.
Economist Dr Geoffrey Williams described it a prudent approach by Bank Negara.
“Maintaining the OPR at this level indicates stability and credibility in monetary policy amid unchanged economic conditions since the last rate cut,” he said in an interview yesterday.
He said the steady OPR benefits borrowers with variable interest loans, offering relief through reduced monthly payments.
“This also makes new loans more accessible at lower rates, easing credit card payments, and providing relief for consumers.
“Lower rates ease borrowing costs, which can help address the 16.3% rise in unsold housing units,” he said.
Williams advised consumers to use this period to rebalance their finances.
“People can use these gains to manage their debts more effectively, such as taking new loans at lower rates to pay off older, more expensive ones.”
Given the stable economic conditions since the previous 0.25% rate cut, Williams also dismissed the need for further reductions. He anticipated that rates would remain steady through the end of the year.
Accountant and tax expert Christine Koh highlighted the dual nature of the current economic climate.
“With lower interest rates, businesses have a golden opportunity to expand and invest, but they must plan wisely, given the global economic volatility we’ve seen recently,” she said.
“Consumers, too, should weigh their options carefully between spending and saving.
“In uncertain times, cash remains crucial, and exploring recession-proof investments, such as gold or even cryptocurrency, could be beneficial to safeguard against economic uncertainty.”
Koh cautioned against relying too heavily on lower interest rates as a singular economic stimulus.
“Continually lowering the OPR could depress the ringgit, making imported goods more expensive and potentially fuelling inflation.
“It’s important to strike a balance to avoid long-term negative impacts on the economy,” Koh said.
Licensed financial planner Linnet Lee said the current OPR is particularly beneficial for homeowners.
“Lower housing loan interest rates could encourage potential buyers to enter the property market, and if the OPR remains stable, both new and existing homeowners could see significant savings on interest.”
However, the low rates pose challenges for retirees who rely on fixed deposit (FD) returns.
“Retirees could find themselves at risk due to lower FD rates. They might need to rethink their financial strategies and consider other recession-proof investments,” Lee added.
