BNM (and ALL central banks) is copying USA FED to keep rate ZERO in the so call effort to spur the economy. It all sound good on paper... but did they really study how it works in the real world? People with $$ getting less interest will MORE likely to keep whatever peanuts they received from their banks deposit and spend even less. It is such CRAP to say lower the rate and make people to spend more and help the economy, such rubbish!! Case in point, did it work in JAPAN? for over 20yrs?? Is it working in EU?? History will tell us who is right... and so far, I think I am right in saying this train of thoughts to FORCE people to spend more with less income from deposit is BS! Show me the prove that people actually spend more in such situation please.

BNM very sad... blindly copying others without doing research. Probably... monkey see monkey do.

In addition, asking people to spend more when they r not getting more from deposit is a recipe for disaster. If we following the westerners way of thinking... keep spending and NOT keep in bank as u suggested, when we r too old to work to earn income, who is going to feed us? the government? PLEASE lah!!!

What can BNM do? LOL... if I got the answer, I will be the governor myself, don't u think? But, I get your point that i am not being constructive. Just criticizing without giving answer is not helpful. But, it really not my job to find an answer for the person who is suppose to find the answer, or else y is she in her job? Anyhow, cutting rates to ZERO does NOT seem to work as evidenced by Japan and EU. Worst, it created more and more debts which will likely NEVER be paid back and hence the banking sector will be burden with more and more bad debts.

Will raising the rate help? Probably not either.

What I would do? Just keep rate where it is. I know your argument is that lowering rate is the least harmful of all options. But, you r hurting all the savers AND you r creating a bunch of over leveraged biz and individuals. Yes, keeping rates high will most likely make a lot of these overly leveraged people and biz go bankrupt.... but, their debts & assets will be priced lower and savers with $$ will come in to pick up and pay back the loans and hence restore the balance and clear the market so that there is NO big built up of debts. The savers will be rewarded for being prudence and the overly leveraged will be penalized. I know it is hard to do and u will be scolded by MOST people because they will lose most of their capital, but, hey, they over leveraged and should pay the price for not being prudent. This is how a free market should work. Somehow, somewhere, westerners have started to distort the free market so that people feel less "pain" but inadvertently (by purpose or not still can debate) created massive massive amount of bad debts. Some argue that Covid is not the fault of the borrower, and they should not be penalized. LOL. Nothing in this world should be taken for granted. When borrowing, u did not leave enough margin for the unexpected and now say you should not be responsible?

So, there u have it, u don't have to "spur" the economy. U just need to let the markets do its job and clear the rubbish and the economy will go from there. Yes, Pain now and Gain later. But, in this internet age. We cannot wait for later anymore, can we?

To be clear I stand on the side of the savers because first I am one. Second, they did not reap the huge profits from leveraging in the good times when thing are booming. Why when things are bad they have to suffer as well?? make no sense. In a way, the new western thinking is encouraging irresponsible risk taking. Good times, i win, bad times, I also win.

Finally! The ONLY central banker in this damn world who sees the WHOLE picture, not just from the borrower point of view. Following quote was from news from CNBC:

″(We must) recognize that appropriately lowering interest rates doesn’t mean the lower, the better,” Guo said. “If rates are far too low … that may cause a problem of capital flowing to where it shouldn’t.”

https://www.cnbc.com/2020/07/13/chinas-cent...-this-year.html

But, then, we are constantly reminded by Trump and the angmoh that china is a communist country. But, how come communist way of thinking seems more market oriented? Are we changing the world order already? Communist become free market while angmoh (who companion by adam smith) become the REAL communist?

In real life, NOBODY is able to save "EVERYTHING" as u said. This is because we have to spend our income on food, housing, and transport at the very least to keep ourselves alive. But, I would argue that we have to save as much as we can not because we will be leaving the so called inheritance to our children, but because we have to look after ourselves in our old age. At least if you got $$, you still got the chance to seek medical help, at least you have the chance of getting well. If you have not much $$ left when severe illness strike to seek best medical assistance, then, u will surely die. So, i think it is best to have $$ left over by the time you die than to die without a penny.

SAVE $$ for yourself, NOT for your beneficiary. So many people think wrongly.

The only person who can answer you with 100% certainty is the current chief of bank negara, Datuk Nor Shamsiah Mohd Yunus. I was glad that she kept a cool head over the last few years to NOT push rate to ZERO like many ang moh central bank did. In hindsight, it was the right stance to at least keep inflation in check. But that was in the past. As you correctly pointed out, ang moh central banks NOW realized they have gone way too far, far, far,... far in easy monetary policies that they are now in panic mode to raise rate as fast as they can, >2% rate hike in 1 year is a very very very rare thing to happen if the hikes these brokerage houses issued come to pass.

If the ang moh really DID hike rate, I expect BN will hike rate too. As for the quantum, BN may not hike as aggressively, because she did not cut as aggressively when the ang moh did in the past few years. So, Ringgit Malaysia will suffer some what because of the smaller yield spread. I am quite sure BN will monitor the ringgit depreciation vis-a-vis the smaller yield spread and act accordingly to stabilize the FX so as not to create undue inflationary pressure from a depreciating currency, at least not to depreciate in a FAST FAST scenario.

Talking about depreciation of RM. I was very sad that Malaysia ALWAYS got these horrible horrible "people" doing bad things to the country, 1MDB. Had we not had this damn scandal, the country currency will not be in the dog house like it is today. These "people" take the country wealthy to fatten themselves while making all the rest of us poorer. I don't know who these "people" are, but we all know the $$ is gone. that is a fact, and please don't argue.

I also want to criticize the notion of INDEPENDENT central bank. That ALL central bankers around the world keep saying they are independent of politics. Such total bull crap! Take the biggest financial center of the world, u know which country i am referring to. Only AFTER the president declared that he is "all in" in fighting inflation that their central bank changed his tune in setting monetary policy. Some may argue that its because economic data changed, so the central bank has to change. LMAO!! The data had changed way before they signal the change. They only change the tune AFTER their president changed his tune. You want me to believe in INDEPENDENCE of the bankers??? P-L-E-A-S-E!!!

I will be very disappointed if BNM do not increase OPR in the meeting next month. If they don't increase, Ringgit will drop further, by how much, i don't know. But, it will definitely drop. With dropping Ringgit, all imported goods (including imported raw materials and fertilizers), will costs more and therefore inflation will rise. Saying that the current inflation is not high and therefore no need to hike rate is backward looking. You need to expect what the future holds and react to the future, not the past. Or else, inflation will spiral out of control.

Yes, Malaysia does indeed subsidize fuel and cooking oil. But, do u really know how the subsidy work? I don't know about fuel oil. But, I know how the cooking oil works. The gov allocate a certain sum of $$ for subsidy. Not by gross weight like xxx tonnes. It subsidizes in ringgit terms. Meaning with Higher cooking oil prices, gov actually subsidizes correspondingly less amount of cooking oil by weight. That is why you have a shortage of cooking oil in the supermarket. You cannot find much stock right? Always out of stock signs.

For me, I believe all these subsidies schemes are INeffective and breed crony-ism and create opportunity for smuggling of these goods to go OUTSIDE of Malaysia.

There is actually a much smarter and easier way to help the lower income group. Just deposit these $$ into the bank account of these lower income group. If they don't have bank account, just do e-wallet depositing. Most people got handphone. If still don't have these, disperse the $$ through the local post office.

It is just a waste of human resources to do all these so call subsidies that are totally INeffective and breed corruption (knowingly or unknowingly). And then send officials to go into supermarket to check if they violated the rules,.. blah blah blah.

YES. I also believe that BNM should hike AT LEAST 0.5% because angmoh fed already hike 0.75% in June and very likely to do the same AGAIN in July! Hiking 1.5% in 2 months. So far this year, BNM only hike 0.25% in May. Although OPR started at a higher level, if the gap with FED keep narrowing, Ringgit is going SOUTH further. IF all go as planned, FED will be at 2.5% by end of July. Malaysia currently, only at 2%. Even if hike 0.5%, OPR ONLY same as FED. Very bad for Ringgit. And I read recently that our country foreign reserves in USD fell to new lows right? So, BNM better wake up and do some serious lifting. UNLESS BNM wants to see a very weak Ringgit and HIGH inflation down the line, though inflation already high. Go to the supermarket and buy things, u will see what I mean. Oh, no need, just eat at your local coffee shop, u will see what I mean.

Malaysia gov so PROUD that doing subsidies can keep inflation low. But, what they don't dare to tell u directly (meaning u have to look at economic figures yourself, they won't dare to say in speeches) is how much more debts ALL of us Malaysians WERE FORCED to bear as a whole. Did u not see how much MORE debts as a % of GDP Malaysia has taken since 2000? It went from 30% to 70%. And gov wants me to believe that doing subsidies is good??

I want to repeat, subsidies ONLY benefit the few well connected smugglers who can sell to outside Malaysia for higher international prices. Let prices fluctuate. Higher prices will typically lead to more production (provided gov do not have restrictive policies like USA now has on oil n gas sector, i.e. throwing out fossils in the long run) and therefore stabilizing prices and hence inflation. As biz gets more profitable, gov taxes will increase, and gov can give handouts to the lower income group, which they want to help.

I heard alot of people saying the current inflation was caused by supply disruptions and raising interest rates will NOT help to lower inflation. But, please remember econ 101, price is the intersection of demand and supply. If raising rates can lower demand, the price at the intersection will therefore be lowered or remain the same if the supply got restricted further. Either way, inflation will cool off as the price (intersection) will be kept more or less at the same place.

Will that cause recession? Given the high job posting in angmoh land now, probably not yet.

0.25% is NOT good enough. Look at how badly the Australian dollar fared today when they raise by 0.5% (lower than the expected 0.75% angmoh will be expected to do later this month). If BNM really do only 0.25%, I expect Ringgit to go even lower. OMG, ALL of us will have lower purchasing power.

Savers have been penalized for YEARS, even with these rate hikes they are not really getting compensated much. As for borrowers, they have had YEARS of cheap money; so, stop complaining.

CONGRATULATIONS BNM!, you decided to push Ringgit lower and make ALL malaysians poorer. Thank You!

TIME is $$, so don't wait. But, you should divide up your cash holdings into at least 4 portions and do FD placement every time BNM hikes. Y 4? because most mkts players think OPR will go to 3% by middle of next yr, meaning like by May or June 2023. From 2% to 3%, if BNM hike 0.25% every time when they hike, means need to do it 4 times. When June comes around next yr, the FD u had place matures and u can go another round again. Just my 2 cents. Take care.

The trend may not reverse, but the speed at which it depreciate will. Take a look at Turkey. The gov does not allow its central bank to hike rates even with the wild inflation going on. The results? Went from 1 usd to 3.54 lira in 2017 to now 17.22 lira (486% in 5years). It went from 1.48 in 2006 to 3.54 in 2017 (239% in 11years) I rest my case and the data speak for themselves.

Also, our Ringgit depreciation accelerated after the 1MDB scandal. Politics matters. If the gov continue the same course it is on, Ringgit is hopeless. Only the well connected will prosper and the rest just get more poor.

Yes, MYR started depreciating since 2011 (actually if u got a very long term chart, MYR going down since 1980s), but my point is the SPEED of decline before and after 1MDB was officially known on January 2015 when Wall Street Journal started to cover this scandal with documents leaking out. Here are my facts with the charts I can find on the internet:

13 Jul 2012 USD/MYR was 3.18653
03 Jan 2015 USD/MYR was 3.517 (dropped 10.37% over 2.5yrs)
13 Sep 2015 USD/MYR was 4.4585 (dropped 26.77% over 8months)

Furthermore, markets move even before the 2015. Why? because sure got smart people knew something is brewing. By the time, it is official, these "insiders" already made most of the profits. If you google for the time line of the scandal, the whole thing started since 2010 in May when 1MDB signed deals with Qatar and UAE. In 2013, Goldman Sachs helped raised US$10Billion. In 2014, The Edge magazine reported 1MDB had USD$10billion debts.

The whole scandal started way way BEFORE 2015 and like I said, "insiders" already started to push down the currency because they KNEW. Then, later when EVERYONE knew in 2015, the falloff ACCELERATED.

Turkey got no EPF? I googled. They got so called social security institution. I cannot post the link because I am still under probation. Here is what I found:

The Social Security Institution (Turkish: Sosyal Güvenlik Kurumu (SGK)) is the governing authority of the Turkish social security system. It was established by the Social Security Institution Law No:5502, which was published in the Official Gazette No: 26173 on June 20, 2006. This brought five different retirement systems that affected civil servants, contractual paid workers, agricultural paid workers, and self-employed workers into a single retirement system offering equal actuarial rights and obligations.[1]

You can double check.

Yes, it is true and I will not deny that Malaysia CURRENTLY does not have run away inflation. But, is that a reason to let our guard down? If you don't nip the problem in the bud, it will be very difficult to cure when it got out of hand. It's just like cancer treatment, for that matter, any medical problems. PREVENTION is always, ALWAYS better than treatment. PREVENT possibility of runaway inflation is better than having to treat it when it is running out of hand.

Just discussing my view. NOT intended to quarrel.

Only if BNM hike EVERY meeting. What I advocate is locking in 12months AFTER BNM hike. They may not hike every meeting. So, don't base on calendar month. Do it AFTER they hike, because I think most banks will hike FD rates AFTER BNM hikes.

Meanwhile, just park at banks with highest savings rate you can find lor.

I was being sarcastic when I made the statement about BNM raising OPR by 0.25% because I was expecting 0.5% hike so that Malaysia OPR will not be lower than angmoh rate by end of July. Angmoh will very likely go to 2.5% by month's end.

We must not forget currencies are traded vis a vis other currencies. Ringgit does not exist in a vacuum. Hence, my point is that with OPR lower than angmoh rate, Ringgit will suffer. The rising Ringgit in the period you highlighted also coincided with the angmoh lowering rate till 0.75%. OPR during this period was 1.75%. Of course Ringgit will do okay.

But, over the very long term, like I said in my previous post, Ringgit has depreciated steadily and consistently since 1980s. You can double check. My own view is that politics got to do with this more persistent drop. OPR will affect only the short term fx, like 1 or 2 yrs. But, politics will affect for decades! If the cronyism and favoritism continue to swindle the country's wealth and render Malaysia less and less competitive, I don't think Ringgit will ever reverse. Malaysia needs to encourage whistleblowing and protect the whistleblower. And stop all the U-turning policies. Even simple things like in what language maths and science should be taught in also keep flip flopping. Not only make the students confused and less competitive when they go out to the workplace, also demonstrate how fickle minded the gov is, how can foreign investors be confident about owning Ringgit? Is it a wonder why it keep dropping vis a vis others? Ringgit can rise against other currencies, if that other country is even more badly managed. Why compare to the worst? Why not compare to those doing better? Stop doing things for personal gains. Think in the interest of the whole country.

BNM is now finally doing the right thing. I quote "It’s important to ensure that our OPR is at the right level to prevent problems that can arise from long periods of low interest rates (e.g., too much borrowing)"

Finally, BNM wakes up and understands that the angmoh model of printing free money will be very problematic in the long run.