The Overnight Policy Rate (OPR)

Overnight policy rate (OPR) The overnight policy rate (OPR) is the rate at which a commercial bank provides excess reserves to other commercial banks. The Central Bank of Malaysia (BNM) will decide the OPR. According to the Monetary Policy Council (nd), Malaysia adopted OPR as one of its monetary policy, as OPR caused a series of events such as benchmark lending rate (BLR), short-term interest rate, time deposit rate, exchange rate. Long-term interest rates, finance and credit facilities, and ultimately various economic factors including unemployment rate, output, price level, inflation are micro and macro factors.

Our team found an article by The Edge. This article is about overnight policy rate (OPR) in Malaysia. As mentioned in this article, the Malaysian National Bank has decided to maintain a 75% overnight policy rate after the first meeting of the Monetary Policy Committee. It believes that current monetary policy is consistent with current economic growth and inflation outlook. The overnight policy rate is the interest rate set by the National Bank of Malaysia and is the target interest rate of the central bank's daily liquidity operation. Therefore, fluctuations in OPR interest rates may affect benchmark lending rates, short-term interest rates, time deposit interest rates, exchange rates, and so on. Currently, the statutory deposit reserve ratio is 1%. The National Bank has decided to maintain the exchange rate of the OPR but if there is a risk of macroeconomic and financial imbalance it can consider other policy measures such as SRR and macro prudent lending measures .

Malaysia's monetary policy is based on the current 5% policy interest rate (OPR) based on the current 5%, interbank interest rate, plus or minus 0.25% is used as the main criterion for BLR calculation. In addition, OPR will be an indicator of monetary policy stance. BLR is determined by the bank itself, but attracts investors to invest in Malaysian projects.

In addition, based on the global economic downturn and the first step toward preparing for the economic downturn, the National Bank of Malaysia recently lowered the nighttime policy rate (OPR) by 25 basis points to 25% . The Malaysia Economic Updates blog clearly states that the Malaysian economy will deteriorate or deteriorate unless there is a change in monetary policy or fiscal policy. In order to increase liquidity and reduce capital costs, the legal reserve (SRR) has been lowered from 0% to 5% since December 2008. If the domestic situation deteriorates, OPR may be 0% or even lower if the inflation rate falls. Because we are unintentionally weakening the ringgit and there is a possibility that the import cost may rise, we have to carefully reduce the interest rate. The budget deficit target for 2009 also increased from 6% of GDP to 8%. The graph below shows a decrease in GDP growth rate