Economist: Monetary policy has to reflect the state of the economy and not be static

: The monetary policy has to reflect the state of the economy and not be static while Bank Negara Malaysia’s role must be seen as independent to allow some space to intervene when necessary, said an economist.

“This is simply because the central bank wanted to help the economy. By bringing down the rates, that would mean the cost of goods became cheaper and would stimulate the economy via investment and consumption,” he told Bernama. “But when there are calamities going forward such as the talk about recession, there is a case and it is quite common that central banks will come in and cut rates again. That is the nature of OPR or any other policy rates across the globe,” he explained.

“What about those who wanted to save their money and seek investments that provide good returns and at the same time have a reasonable risk tolerance? Deposit is a very decent kind of investment vehicle for a typical man on the street,” he said. Commenting on this, Mohd Afzanizam said the rapid adjustment by the US and EU were coming from very a low base policy rates of almost zero or in the case of Europe, they are in negative interest rate regimes and their move now means reverting back to a more normalised region.

“BNM is now trying to revert to its normalised rating. We are now at 2.75 per cent, probably another 25 basis points may not be too much of a hassle for economies to take in terms of the impact. He also shared that the demand condition was very strong last year on the back of the high growth in GDP with private consumer spending growing at a double-digit pace giving the sense that the demand-pull inflation has become more prevalent.

✔️said.Those unemployed/unabled dependg on bank interest 4 their life savings/FDs, r about 40% of population. ⬆️OPR, indirectly ⬆️ rates. Eg. Retirees,children,sicks,stroke patients,hsewives, etc..etc. 4 those able, can find more $ 2 pay marginal loan ⬆️. In 1970s, way⬆️10%.👍.

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