Bank Negara Malaysia raises OPR for a fourth time this year – up 0.25% to 2.75%; expect costlier car loans

Bank Negara Malaysia raises OPR for a fourth time this year – up 0.25% to 2.75%; expect costlier car loans

For the fourth time this year, the monetary policy committee (MPC) of Bank Negara Malaysia (BNM) has decided to increase the overnight policy rate (OPR), which impacts the interest rates on loans. As per BNM’s statement issued on November 3, 2022, the OPR has gone up by another 25 basis points (0.25%) to 2.75%. This mirrors previous OPR increases announced on September 8, July 6 as well as May 11.

BNM said despite the support from positive labour market conditions and the full reopening of most economies and international borders, global economy is still be weighed down by rising cost pressures, tighter global financial conditions and strict containment measures in China.

“Inflationary pressures were more persistent than expected due to strong demand, tight labour markets, and elevated commodity prices, despite improvements in global supply chain conditions. Consequently, many central banks are expected to continue raising interest rates to manage inflationary pressures,” it said in its statement

“Going forward, the global growth outlook will continue to face headwinds from tighter financial conditions amid elevated inflation in major economies and the domestic challenges in China. The growth outlook remains subject to downside risks, including escalation of geopolitical tensions, worsening of domestic headwinds in China and potential energy rationing in Europe,” it added.

Bank Negara Malaysia raises OPR for a fourth time this year – up 0.25% to 2.75%; expect costlier car loans

The central bank also noted that Malaysia’s economic activity has strengthened further in the third quarter of this year, with robust domestic demand being the main driver of growth. In line with earlier assessments, it said headline inflation is likely to have peaked during the recent quarter, with underlying inflation – as measured by core inflation – projected to average closer to the upper end of the 2.0-3.0% forecast range in 2022, having averaged 2.7% year-to-date.

The higher the OPR is set, the more expensive it is to borrow money, which will most likely result in increased rates for hire purchase loans, which is the most common form of financing taken up by car buyers. This will make loans more expensive, and banks may be more cautious when it comes to approving them.

This is the sixth and final MPC for 2022, and in 2023, it is widely expected that the OPR will be increased further, with analysts saying BNM will look to tame inflation by raising the OPR to a neutral rate of between 3.25% and 5%, The Edge reports.

Have you placed a booking for a new car recently and took on a loan to finance it? Was the loan approved and what was the interest rate offered to you? Share your experience in the comments below.

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Gerard Lye

Originating from the corporate world with a background in finance and economics, Gerard’s strong love for cars led him to take the plunge into the automotive media industry. It was only then did he realise that there are more things to a car than just horsepower count.

 

Comments

  • From the web on Nov 07, 2022 at 11:11 am

    From TheGuardian:
    The Federal Reserve has stepped up its fight against a 40-year high in US inflation, announcing its fourth consecutive three-quarter-percentage-point hike in interest rates but signaling the pace of increases may soon slow.

    With the cost of living crisis battering consumers and Joe Biden’s political fortunes, Fed officials have now imposed six rate rises in a row, the sharpest increases in interest rates since the 1980s, when inflation touched 14% and rates rose to nearly 20%.

    The Fed’s latest increase brings the federal funds rate – which acts as a benchmark for everything including business loans, credit card and mortgage rates – to between 3.75% and 4% after sitting at 0% for more than a year during the coronavirus pandemic.

    The Fed’s move comes as governments around the world are struggling with a surging cost of living crisis. Soaring food prices have pushed inflation over 10% in the UK and on Thursday the Bank of England is expected to raise its base rate by as much as one percentage point to 3.25%. Last month, the European Central Bank also increased its cost of borrowing to tackle inflation, now at a record high of 10.7%.

    Like or Dislike: Thumb up 20 Thumb down 2
  • awaKL on Nov 07, 2022 at 11:35 am

    What to do when we have a F.Minster who was a CEO of a bank and still in love with enriching banks by making their customer/citizen poorer as a result which is contrary of what he should be doing.

    Also do tell us again how does this improve inflation or anyone’s livelihood or even our RM which is the worst in our region.

    Like or Dislike: Thumb up 22 Thumb down 26
    • OMG, then most leaders all over the world must be making the same mistake as they are doing the same thing. U better hurry up and viral this irresponsible act via your social media account. U will be famous and in run to get a nobel prize as saviour of mankind.

      Like or Dislike: Thumb up 18 Thumb down 12
      • awaKL on Nov 07, 2022 at 1:49 pm

        Problem is that when USA or other neighboring county does it their currency gets better while ours just goes down and further down –

        Like or Dislike: Thumb up 7 Thumb down 19
        • I don’t know which planet you living where currency gets better. UK pound been dropping, Sing dollar down, HK dollar down, Japan yen drop worse than MYR, Euro also going down. The article post by From the web clearly shows reality is different from what you said.

          Like or Dislike: Thumb up 20 Thumb down 2
    • Tin Kosong Tian Chua on Nov 07, 2022 at 4:58 pm

      Now,most business are finding hard to break even,let alone talk about profits.
      Tell us,anyone getting fat bonuses this covid recovery year?
      BN cant just follow the other central banks n jack up interests.Come CNY,many SMEs might not have enough funds to pay the staff.Instead of angpows,the staff get a “I HUTANG YOU SALARY ” letter.
      Time,to NEVER allow the “bandits” to return to power.
      If bandits do return,we need RM6 to buy one UDS.

      Like or Dislike: Thumb up 7 Thumb down 11
      • Farney lah you. The only bank that broke from convention was BOE during Kwasi’s tenure as Chancellor and his unfunded tax cuts to help businesses had instead caused the Pound to drop, inflation went crazy, people went crazy and finally led to the shortest reigning British Government in history. Businesses gain but people suffer. Why do we want that. Following the convention means short term pain but long term gains, businesses that cannot sustain in tough times should not be in business when they have bad planning or top management as bandits.

        Speaking of which, NEVER let the the BANDITS making fantastical promises return just to see them flail once more in failing to fulfill said promises. This is a sure recipe for national disaster.

        Like or Dislike: Thumb up 3 Thumb down 0
      • Copy Paste on Nov 08, 2022 at 8:05 am

        Copy paste: “Only pengkhianat will vote for track record of 22months instability, utter useless governance with record level of corruption.”

        Like or Dislike: Thumb up 4 Thumb down 1
    • You must be a Kwasi Kwarteng fanboy. Another one living in the clouds playing with Monopoly money and not thinking the consequences. Whatever ills you think about Zafrul, Kwasi is 10X worse.

      Like or Dislike: Thumb up 7 Thumb down 1
    • Donny Brazzco on Nov 09, 2022 at 12:22 am

      Economically law. To overcome inflation, raise the OPR is one of the solutions. If otherwise, the impact of inflation would be worst. Thats why previously government give some amount of free money to the people to increase the power of buying, so the money will circulate around the country to reduce economy crisis impact..

      Like or Dislike: Thumb up 1 Thumb down 0
  • Just look at the buying frenzy whenever a new model comes out… People obviously have too much cash or are too YOLO.

    Like or Dislike: Thumb up 8 Thumb down 0
    • Sang rimau on Nov 07, 2022 at 1:35 pm

      Must buy ma, best selling model king , H also .sales must increase, more new highway build that brings nothing. They should build more train buy new train set.paling kurang also give us a BRT.Can the govt study from other countries or not.

      Like or Dislike: Thumb up 3 Thumb down 0
  • Jennie Chue on Nov 07, 2022 at 12:26 pm

    I just bought 2 blouses from yours. But received one blouse got defect. How should I do?

    Like or Dislike: Thumb up 1 Thumb down 2
 

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