Bank Negara's 3% overnight policy rate supports growth, Ahmad Maslan tells Dewan

The Star

The current 3% overnight policy rate (OPR) set by Bank Negara remains conducive for supporting the nation's economic growth, says Datuk Seri Ahmad Maslan.  The Deputy Works Minister stated that any changes to the OPR would be based on economic and inflation considerations.  He explained in response to a question by Chong Zhemin (PH-Kampar) on behalf of the Finance Ministry in Dewan Rakyat on Wednesday (Oct 16).   Read more at https://shorturl.at/9jwFV  WATCH MORE: https://thestartv.com/c/news SUBSCRIBE: https://cutt.ly/TheStar LIKE: https://fb.com/TheStarOnline

Transcript

00:00Mr. Speaker, I would like to read the answer from the Minister of Finance.

00:06He is healthy, but his voice is not.

00:10Therefore, I will read the answer one by one.

00:15The movement for the value of the Ringgit this year is driven by the development

00:21in the global market and strong domestic economic performance.

00:26Since 2022, a higher base rate in the main economic countries

00:31has attracted investment funds from developing countries including Malaysia.

00:35With the transition of the global main economic monetary base,

00:39especially the United States, which has begun to lower the base rate,

00:44the behavior and sentiment of investors have also changed

00:47following a smaller difference in interest rates.

00:51This development has led to the willingness to take risks,

00:56investors' appetite for market funds that are eager to build

01:00with the permission of emerging market currencies, including Ringgit, to increase.

01:05In addition to global development, the Malaysia Ringgit shows stronger performance

01:09compared to domestic funds,

01:11driven by investors' confidence in the government's renewal agenda.

01:15The government's approach assures that the first approach

01:19is to establish a clear goal through the framework of the civil economy,

01:23and the second is to comply with the implementation of basic development,

01:26including public finances and fiscal responsibilities,

01:30as well as the implementation of electricity, water and diesel subsidies.

01:34The framework of the civil economy is also supported through basic papers

01:38such as the Induk Per Industrian Baharu 2030 Plan,

01:42which sets the strategy and focus of state investment

01:45to support the country's economic transition to be more prosperous,

01:48prosperous and sustainable.

01:50Subsequently, the country's economic base is getting stronger.

01:53First, the economic growth of the second ethnic group, 2024,

01:56reached 5.9% compared to the first ethnic group, 4.2%.

02:02Second, unemployment continues to fall to 3.2% in August 2024,

02:07in line with the situation before COVID-19.

02:10Third, inflation in August 2024 remained at 1.9%

02:15at a controlled level of 2% for the previous three months.

02:19In addition, the investment that was approved,

02:21trade and the Indeks Pengeluaran Per Industrian showed a stronger performance,

02:26as well as a strong financial system that also contributes to the increase in the value of ringgit.

02:30The Government and the Bank of Malaysia have also taken appropriate action

02:34to boost foreign investment income back

02:37and exchange it to ringgit by government-related companies,

02:40such as DLC and Korporat.

02:42This step helps to create a two-way network

02:45that is more robust in the domestic foreign exchange market,

02:48and then helps to strengthen the value of ringgit.

02:52Thank you for your explanation, Minister.

02:55Previously, the opposition played the issue of the value of ringgit.

02:59Some said it was the value of Rahmah.

03:02Some used wrong data from Google to attack the government.

03:06But today, we see that the value of ringgit is increasing,

03:09and this is due to a strong value.

03:12We need to remember that the value of ringgit has a lagging effect.

03:16When the government rises, it does not rise directly.

03:18In the next two years, we will see the effect.

03:20So my question is,

03:22major central banks such as the United States and the United Kingdom

03:26have lowered their interest rates.

03:29Will the Bank of Malaysia follow in the footsteps of these central banks?

03:34And if so, what impact will it have on ringgit?

03:42Thank you, Mr. Kampar.

03:44There is an answer here.

03:50It's a tricky question.

03:52I admit on behalf of the Ministry of Finance, it's a tricky question.

03:56If not, I can't answer, even though I know the answer.

04:00Even though I know the answer,

04:02but I can't be smarter than the other ministries.

04:05The answer is this.

04:07The decision of the OPR by the Bank of Malaysia

04:10will continue to be pushed by the development of domestic Malaysia

04:13which affects growth prospects and inflation.

04:17For example, when the Central Bank of the United States

04:19rapidly increased its base rate,

04:22the Bank of Malaysia did not follow along

04:24by increasing our OPR to 5%.

04:28Instead, the OPR remained at the same rate of 3%.

04:31The principle is still the same for the current situation.

04:34The Bank of Malaysia's consideration is different from other central banks

04:38and more dependent on the situation we face.

04:41The Malaysian economy is currently at an exciting stage

04:45and the price pressure is still under control.

04:48The OPR rate at the moment is conducive to supporting economic growth.

04:58For more UN videos visit www.un.org

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