Forecasting a strong growth for Malaysia, Bank Negara Malaysia (BNM) increased the overnight policy rate (OPR) by 25 basis points to 3.25 percent at this year’s first Monetary Policy Committee (MPC) meeting.
The last OPR hike was in 2014, which was also by the same amount.
“With the economy firmly on a steady growth path, the MPC decided to normalise the degree of monetary accommodation,” said the central bank in a statement.
“At the current level of the OPR, the stance of monetary policy remains accommodative. The MPC will continue to assess the balance of risks surrounding the outlook for domestic growth and inflation,” it added.
Describing the move as inevitable, economic analyst Prof Hoo Ke Ping said the rate hike will “stop a possible chain reaction and suppress the expectation of inflation”.
He also expects the move to deter property speculation.
In fact, speculators acquiring properties in blocs will be hit the most as they would have taken massive loans to fund their purchases, said Hoo.
And while the general public may also be affected by the rate hike, the effect would not be of the same extent as major speculators.
“It is not unthinkable that many will seek to unload properties at a much lower price, potentially benefiting those who are currently unable to own homes,” he said, referring to speculators.
Moreover, the increase may also force developers to review their prices in a bid to lower excess supply.
“Stock owned by property developers in the form of apartment lots and units and others will have to be sold at a lower price as consumers would be less interested in bank loans, which would cost them more,” said Hoo.
“To encourage sales, developers will have to lower their prices making them more affordable to consumers.”
Image sourced from Malay Mail
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