2 MIN READBNM cuts OPR by 50bps to 2%, hitting a new low in 10 years

On May 5, 2020, Bank Negara Malaysia (BNM) has reduced the Overnight Policy Rate (OPR) by 50 basis points (bps) to 2%, the lowest last seen during the 2008-09 global financial crisis.

For the third time this year, Bank Negara Malaysia announced to lower the OPR. Back on March 3, 2020, Bank Negara Malaysia announced that the overnight policy rate would be reduced by from 2.75% basis points to 2.50%.

And during the beginning of the year on January 22, 2020, Bank Negara Malaysia stated that the overnight policy rate would be reduced from 3% to 2.75%.

The central bank noted that with this latest cut, the OPR has been reduced by a total of 100bps since the start of the year.

OPR Decision and Statement
Date Change in OPR (%) New OPR Level (%)
05 May 2020 -0.50 2.00
03 Mar 2020 -0.25 2.50
22 Jan 2020 -0.25 2.75
07 May 2019 -0.25 3.00
25 Jan 2018 +0.25 3.25
13 Jul 2016 -0.25 3.00
10 Jul 2014 +0.25 3.25
05 May 2011 +0.25 3.00
08 Jul 2010 +0.25 2.75
13 May 2010 +0.25 2.50
04 Mar 2010 +0.25 2.25
26 Jan 2010 0 2.00

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What is Overnight Policy Rate (OPR) and how it affects the property market?

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According to Juwai IQI Chief Economist Shan Saeed, BNM cut of the OPR was in line with market expectation. It reduced the rate by 50 bps, thus bringing the rates down to 2%. In my view, Bank Negara Malaysia would continue to follow its mandate, i.e.

1. Price inflation stability
2. Growth stability
3. Financial market stability

In order to support the growth outlook, the central bank will continue its accommodative monetary policy for the remaining quarters. It’s not just BNM but many central banks globally which are reducing interest rates. To-date, 31 central banks have reduced their interest rates to spur growth in various economies around the globe.

This strategic move from BNM would create a bigger policy impact on the local economy. It is positive sign for business, industry and consumers in general. At the macro level, it provides consumers with more room to spend money and support the local economy to buttress aggregate demand. Moreover, the strong consumption patterns for the economy contributes significantly to the overall gross domestic product equation.

Now is probably the best time to purchase property due to the reduced Overnight Policy Rate. Interested in buying real estate during this period? Our team of professional real estate agents will be able to help you in finding what it is you’re looking for. 

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