KUALA LUMPUR: The reduction in the Overnight Policy Rate (OPR) has helped to lower the cost of borrowing and spur economic growth by stimulating domestic consumption, says Deputy Finance Minister II Mohd Shahar Abdullah.
He said following comprehensive measures taken by the government and Bank Negara Malaysia, the main economic indicators show that the economy has been gradually recovering since April this year.
“The recovery process is expected to continue in line with the recovery of the global economy and sentiment.
“As a simple example, if your 30-year housing loan totalling RM350,000 at an initial interest rate of 4.50 per cent and with the 125 basis points cut in the OPR this year, your monthly repayments will be RM1,523 compared with RM1,773,” he said when winding up the debate on the Royal Address during the Second Meeting of the Third Term of the 14th Parliament sitting.
Mohd Shahar said borrowers can save RM250 a month with the OPR cut, and they can choose to save or spend, but noted that domestic spending will help to stimulate Malaysia’s economy.
The cumulative 125 basis points cut in the OPR this year will continue to support the economic recovery process, he added.
The Bank Negara Malaysia Act 2009 provides the central bank with the autonomy to effectively fulfil its mandates of promoting monetary stability and financial stability.
“BNM had also announced a lowering of the Statutory Reserve Requirement (SRR) ratio by 100 basis points to 2.00 per cent in March and May 2020 as well as the flexibility to banking institutions to use MGS and MGII to meet the SRR compliance,” he said.
This measure has released approximately RM46 billion worth of liquidity into the banking system and is part of BNM’s continuous efforts to ensure sufficient liquidity to support financial intermediation activity, he added. – Bernama