KUCHING: The Bank Negara Malaysia (BNM) must firmly maintain its independence as an institution, free from any form of political influence.
Universiti Malaysia Sarawak (UNIMAS) economist Jerome Kueh emphasised that the BNM’s primary role is to maintain monetary stability and support sustainable economic growth, rather than pursuing short-term political agendas.
He warned against government interference in BNM’s monetary policy, stating that relying on government decisions would be “fatal” for the central bank.
“By law, we cannot coordinate. Trust in the markets is also crucial. If any government manipulation or interference occurs in monetary policy decisions, it will undermine the integrity of the markets,” Kueh told New Sarawak Tribune responding to former finance minister Lim Guan Eng’s statement that BNM should maintain its pause on raising the overnight policy rate (OPR) and support the government’s policy objectives.
Kueh underscored the importance of the BNM’s independence, allowing it to make monetary policy decisions in the best interest of the nation.
He said, “A highly responsive BNM is crucial for addressing the ever-changing global business cycle.”
Furthermore, he noted that an independent BNM boosts public and investor confidence in the credibility of its monetary policy, which aligns with current economic conditions.
On the other hand, reduced independence can result in inflation, economic instability, and diminished trust in the monetary policy’s credibility.
Kueh recognised that both the BNM and the government share common objectives for promoting the nation’s sustainable economy. “There must be synergy between them,” he said.
In response to the Malaysian Association of Social Protection Contributors’ Advisory Services (SPCAAM) urging Prime Minister Datuk Seri Anwar Ibrahim to make significant changes to the central bank’s leadership to demonstrate its commitment to combating systemic corruption, Kueh said that the government may collaborate with the BNM on specific policy goals, but not to the point of turning the central bank into a “political football”.
He added that the BNM must retain its freedom to act independently on monetary policy matters to ensure policy decisions reflect long-term objectives of sustainable economic growth.
Finally, Kueh recommended that the BNM should concentrate on stabilising prices, while politicians work on fairly distributing limited resources.
