BNM’s accommodative stance complements government’s series of fiscal stimuli
KUCHING: Malaysian Rating Corporation Bhd (MARC) says Bank Negara Malaysia’s (BNM) accomodative monetary policy stance of retaining the overnight policy rate (OPR) at 1.75 per cent complements the government’s series of fiscal stimuli.
In its economic research report, MARC said: “We see BNM’s current accommodative monetary policy stance complementing the government’s series of fiscal stimuli.
“The government had recently announced the Pemulih stimulus package worth RM150 billion to cushion the adverse impact of mobility restrictions. The package is an indication of its willingness to do more when needed.”
It is cognisant of the limitations of monetary policy to boost growth in the current crisis.
“Further OPR cuts could potentially exacerbate financial vulnerabilities such as rising household debt.
“In any case, BNM has been cautiously managing household debt so as not to affect the economy, especially private consumption,” it added.
Due to the aforementioned factors, MARC anticipate BNM extending its OPR pause at least through the whole of 2021, until a recovery is cemented.
“That said, BNM has reiterated that it remains committed to utilising its policy levers as appropriate to create enabling conditions for a sustainable economic recovery.
“As such, we do not rule out the possibility that BNM will introduce measures other than interest rate adjustments to support the economy,” it added.