KUCHING: The latest hike in overnight policy rate (OPR) is hurting everyone, says Sarawak DAP.
Its chairman Chong Chieng Jen said the decision by Bank Negara Malaysia (BNM) to increase the OPR by 25 basis points to 2.5 per cent will in turn cause more harm to local economy than do good.
“This is the third time BNM has increased interest rate this year, raising it from 1.75 per cent in the beginning of this year to 2.5 per cent.
“This 0.75 per cent interest rate increase will hurt people who have taken out housing loans and other loans.
“As an illustration, for a person having a housing loan of RM300,000, a 0.75 per cent increase in interest rate means that an increase of RM2,250.
“In other words, the housing loan borrowers will have to pay an additional RM187.50 per month because of the interest rate increase by the government this year alone,” he said in a statement yesterday (Sept 9).
Chong, who is also the Stampin MP, pointed out that the increased interest rate is not only hurting the general borrowers, but also does not help to curb inflation.
Before this, BNM increased interest rates twice this year, yet the country is still experiencing high inflation rate, he said.
“That is because our current inflation is due to supply-push factor, not so much as demand-pull factor.
“Increase in prices of raw materials, freight charges, fertilisers, animal feed, food prices and the depreciation of the ringgit are the main contributors to inflation in our country,” he said, adding that increasing interest rates will not help to bring down these prices.
“On the contrary, it will slow down our economy and hurt businesses and the general house purchasers.”
According to Chong, BNM’s latest report shows that the Malaysia’s household debt-to-Gross Domestic Product (GDP) ratio as at December 2021 was 89 per cent.
This is extremely high when compared to other neighbouring countries in the region, he noted.
As at December 2021, Singapore’s household debt to GDP ratio was 69.7 per cent, Indonesia’s (17.2 per cent) and the Philippines’ (9.9 per cent).
In layman’s terms, Chong said most households in Malaysia have bank loans and thus the increase in OPR means that all these families will have to pay more in their monthly instalments.
The DAP man called on BNM to reconsider its decision to increase the OPR.
