Monetary policy is pre-emptive, not premature

Monetary policy decisions affect many facets of a nation’s economy. As such, it is often the case that such decisions are closely watched and debated not just by financial markets, but also by the general public. The lively conversations around the Bank Negara (BNM) Monetary Policy Committee’s (MPC) decision to raise the OPR by 25 basis points on May 3 exemplify this fact. Deciding on the OPR isn’t something we take lightly. There are many factors that the MPC considers. Our analysis is based on a broad range of forward-looking data and engagement with various industries and consumers.

In addition to the monetary policy statement itself, we have also put out other explainers (e.g. a simplified snapshot of our monetary policy statement, FAQs) on our website and on social media. In this letter, I hope to provide further context and colour to the MPC’s actions, and clarify some points that have been made in the public discourse that we have been observing.