OPR rise is a double edged sword. First of all, if we ask the average person what inflation is like for them, I suspect it will be much higher than the officially reported figures and government obviously knows this. But to control inflation it is necessary not to kill growth or we end up with stagflation and that takes a lot more sorting out. Raising OPR 'should' help to control inflation (and protect the exchange rate) but it needs to be done aggresively and quickly enough and often enough to have the desired effects on inflation whilst not adversely affecting the economy too much.

For these reasons, I can see a series of 0.25% or 0.5% rises to OPR and I do believe that we will see OPR at least at 3% by H@ 2023.

Agreed. Unfortunately Europe will have to raise bank rates considerably to fight its inflation battles and this will further weaken the Ringgit (causing import prices to rise in Malaysia) unless Malaysia also raises OPR by a similar amount.

Inflation is a global problem now. Some countries are affected more than others but higher interest rates are necessary just about everywhere.

I'm not going to go off thread and into the realm of politics but Ukraine has every right to defend itself and the West position is that if it doesn't help Ukraine fight Russia now it will end up very quickly having to fight Russia itself in Poland, Estonia, Latvia and Lithuania (to begin with) - at far greater human cost and global economic cost - including, of course, to Malaysia. No enforced peace deal will ever work as Russia will just be emboldened to try the same invasion tactic on its next target country.

As far as incompetence and greed of governments is concerned, let's just say that the West hardly has a monopoly on those qualities, does it!

Back on thread, the next BNM decision on OPR is due tomorrow and there may well be another rise. Let's just hope that decisions made at the next few BNM OPR meetings are effective in fighting inflation in Malaysia so we can all stop worrying about putting rice on the table. Hunger and poverty does not respect national boundaries and we should all remember that and be ready to help each other imho.

Not angry at all. I think you misunderstand my post. It is necessary to understand the position of all protagonists in order to reach a reasonably balanced point of view. I want peace as much as anyone but nobody can force Ukraine to accept a peace that would, in reality, be total surrender. Whether you or I agree on that is irrelevant. That is the Ukraine position.

Once again, back on thread. Do you think OPR will rise again tomorrow?

I think so too. And it will be the first time in a decade that OPR has increased in 2 consecutive BNM OPR meetings. Most commentators are predicting another 25 point rise in September too. That would make OPR 2.5% and well on course for >3% in H1 2023. Good for net savers, hopefully it will control inflation but obviously not so good for those with loans at variable rates.

I am a net saver so I am certainly not complaining. But I do feel for people who have big loans.

No, not at all, but not everyone has the luxury of choice in the matter you refer to. I would not feel much sympathy for anyone with a loan for an expensive car for example. But if it was for a mortgage on their only (modest) property which provided a home for them and their extended family then I would have sympathy.

I also agree with your sentiments that returns have been poor for savers for several years now and it is only fair that FD rates and general Returns On Investment should now increase substantially.

This post has been edited by MattSally: Jul 6 2022, 07:34 AM

My 2 cents says wait a bit yet. USA, UK and Europe are all set for further interest rate rises and Malaysia will really have to follow suit to protect the Ringgit as best it can. The next OPR rise is likely 8/9/22 and I would be tempted to wait until at least then. I wouldn't bet against OPR of 2.75% by the end of this year and 3.25% by the end of H1 2023.

This post has been edited by MattSally: Jul 21 2022, 12:37 PM

USA just raised its base rate by 0.75%. BNM will have to follow suit in September to protect the Ringgit so 12 month FD rate should be well over 3.5% by mid September 2022.

This post has been edited by MattSally: Jul 28 2022, 06:14 PM

UK Base rates likely to rise significantly this Thursday. This all adds pressure to BNM to raise rates in Malaysia in September to protect the Ringgit - which will be good news for FD rates again.

UK raised ts base rate by 0.5% today with further rises signalled. Malaysia will have to follow suit in September so OPR rise of 0.25% to 0.5% to factor into any FD decision making - with more rises to come I think.

Most commentators agree with you and are predicting a 0.25% rise in September and another 0.25% rise in November. That would give OPR of 2.75% at the end of 2022 with further rises to 3% or 3.25% likely in 2023.

Wait until 8th September and those rates will be going up by at least 0.25%.

This post has been edited by MattSally: Aug 11 2022, 03:08 PM

I am not convinced by that argument. I think UK and US will continue to raise rates and that Malaysia will follow - partly to protect the Ringgit and partly because the recovering Malaysia economy will allow it.

I think at least another 0.25% rise in OPR is due this year and I think it will be tomorrow.

This post has been edited by MattSally: Sep 7 2022, 08:26 PM

And other financial commentators see OPR stable at around 3.5% in 2023. I have no crystal ball but I will be surprised if there is not at least two more 25 point rises to OPR before the rate stabilises.

https://themalaysianreserve.com/2022/11/04/...in-2023-to-3-5/

You may be correct. It is certainly going to be an interesting few months for investors. In theory the new government should have no impact on BNM setting the OPR as BNM is totally independent.

This post has been edited by MattSally: Dec 11 2022, 08:49 PM

OPR didn't drop below 3% until Jan 2020 so I would call the lowest pre pandemic level 3.0%, but mainly 3.25%. That has also been declared as the lower level of the 'neutral' OPR range so I can see the rate going to 3.25% and staying there throughout 2023.

https://www.bnm.gov.my/monetary-stability/opr-decisions

But, TE is forecasting no change in January.

https://tradingeconomics.com/malaysia/interest-rate

We shall see.

This post has been edited by MattSally: Dec 12 2022, 10:11 PM

UK, EU and Fed are each expected to raise their base rates by 50 points this week. That will impact the Ringgit unless OPR also rises.

As expected, UK, EU and USA have each raised their base rates by 0.5% this week. I think OPR has to also rise again in January.

UK interest rate is 3.5% as far as I know, though it is forecast to be 4% by the end of Q1 2023.

Whilst UK interest rates have been very low since 2008 GFC the average rate over the last 200 years or so has been around 5% so all UK is doing with rates is 'finally going back to normal.'


https://tradingeconomics.com/united-kingdom/interest-rate

https://www.bankofengland.co.uk/boeapps/dat...e/Bank-Rate.asp

This post has been edited by MattSally: Jan 26 2023, 12:50 PM