“It is at a level that we need to pay close attention. Although it is at a high level, what was emphasised before was to make sure borrowers understood and were able to repay the loan.

“From the financial stability perspective, we see that this number is manageable because in terms of impairment rate (for loans) in Malaysia, it is still very good.

“But we have to be vigilant to monitor this in terms of households as a whole,” he said after the release of BNM’s Annual Report 2023 today.

Total household debt has been on an upward trajectory in recent years from RM1.19 trillion in 2018, and rising to RM1.32 trillion (2020), RM1.38 trillion (2021), and RM1.45 trillion (2022).

Rasheed said the government, through BNM, has taken a prudent approach to ensure the rising household debt has no negative effects on the stability of the country’s financial system.

Deputy finance minister Lim Hui Ying said BNM is working to improve the public’s financial literacy level and encouraging households with substantial borrowings to follow the Credit Counselling and Debt Management Agency’s (AKPK) online financial education programme.

On the issue of subsidies, Rasheed said the impact of reform measures like subsidy rationalisation is temporary and does not require monetary policy intervention.

He added that monetary policy is a blunt tool that addresses the demand component of the economy.

“Nevertheless, we will remain vigilant and continue to look at the data, whether there is an anchoring of inflation or demand pressures. Only such situations will require monetary policy interventions,” he added.