PUTRAJAYA – The government has managed to control inflation and the recent increase in the overnight policy rate (OPR) was more in response to US interest rates, Economy Minister Rafizi Ramli said.
“In the first six months of the current government, we managed to aid Bank Negara Malaysia (BNM) in reducing pressure to raise the OPR because inflation rates have steadily decreased every month.
“The inflation rate is now under control. Even if the OPR increased this time, it was more of a preemptive response to the US Federal Reserve potentially upping its rates,” he said when approached by reporters at the ministry’s Hari Raya Aidilfitri celebration here today.
The minister, who is also the Pandan MP, said the unity government had successfully reduced pressure on BNM to increase the OPR, which was raised by 25 basis points to 3% last week.
BNM had maintained the OPR at 2.75% since November last year and had been expected to maintain it at this month’s monetary policy committee meeting. The US Federal Reserve also raised US interest rates by 25 basis points last week.
Rafizi explained that an increase in the US interest rates will necessitate similar moves in Malaysia as the nation cannot risk a drop in its currency or the departure of foreign investors.
“If the US increases their interest rates within the near future, and we do not handle the matter appropriately, then we run the risk of investors bringing their business to our neighbouring countries.
“If we do not match our rates with that of the global market, then citizens here could face trouble since our currency will drop, which will indirectly cause an increase in prices since we will be forced to import goods,” he said.
He also reiterated the government’s stand that it will not interfere with BNM’s role in deciding the OPR.
“It is better for all parties that BNM has sole purview over the OPR, as there are risks if politicians have a say.
“If politicians are given full freedom to determine the OPR, it would be easy for us to make loans (as) we could set a low OPR percentage.
“We could increase the government's loans every year because of the low OPR and decreased costs,” he said.
Meanwhile, Rafizi declined to comment on the recent expose on the Human Resource Development Corp (HRD Corp) and its use of the Official Secrets Act (OSA) 1972 to ostensibly “protect” a letter relating to alleged discrepancies involving the Skills Passport programme from public view.
When asked about the use of the OSA, Rafizi said he had “just heard about” the issue and reserved his comments.
“Let me get the full picture (of events) from both sides involved and hear their sides of the story first before I make any comments,” he said briefly.
Rafizi in 2016 was found guilty of breaching the OSA and was sentenced to 18 months in jail after he was found to have a page of a classified document on the 1Malaysia Development Bhd financial scandal in his possession without authorisation.
On the HRD Corp issue, the agency under the Human Resources Ministry has denied all allegations relating to supposed discrepancies in the contract and procurement process of the Skills Passport initiative.
Besides threatening to take legal action against The Vibes, it also claimed that issues highlighted in the portal’s report, which included information based on a letter by a Finance Ministry (MoF) official, had been resolved at the board level in HRD Corp.
Today however, the MoF representative on the HRD Corp board, Datuk Rosli Yaakub, told The Vibes that he stood by the contents of the letter and that his concerns have yet to be addressed. – The Vibes, May 8, 2023
