Bank Negara raises OPR by 25 basis points to 2.75pct

Bank Negara Malaysia (BNM) has raised the overnight policy rate (OPR) by 25 basis points to 2.75 percent.

The central bank said the ceiling and floor rates of the corridor of the OPR are correspondingly increased to 3.00 percent and 2.50 percent respectively.

"The global economy continues to be weighed down by rising cost pressures, tighter global financial conditions, and strict containment measures in China.

"These factors more than offset the support from positive labour market conditions, and the full reopening of most economies and international borders," BNM said in its monetary policy statement today.

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BNM noted that inflationary pressures were more persistent than expected due to strong demand, tight labour markets, and elevated commodity prices, despite improvements in global supply conditions.

"Consequently, many central banks are expected to continue raising interest rates to manage inflationary pressures.

"In particular, continued aggressive adjustments in US interest rates and expectations of a higher terminal rate in the US, have contributed to a persistently strong US dollar environment," it said, adding that this has resulted in higher volatility in financial markets, affecting other major and emerging market currencies, including the ringgit.

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, BNM .

"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."

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Bank Negara raises OPR by 25 basis points to 2.50pct