The OPR was last raised by 25 basis points (bps) to 2.75% in November.

The central bank raised the OPR to 2% from 1.75% in May last year, reportedly the lowest on record, following a 25bps cut in July 2020.

BNM raised the OPR by another 25bps to 2.25% in July, to 2.5% in September, and then again to 2.75% in November.

BNM said the decision not to raise the OPR for the fifth time was to allow it to assess the impact of the past cumulative OPR adjustments, given the lagging effects of monetary policy on the economy.

“At the current OPR level, the stance of monetary policy remains accommodative and supportive of economic growth,” it said in a statement.

“Further normalisation to the degree of monetary policy accommodation would be informed by the evolving conditions and their implications to the domestic inflation and growth outlook.

“The MPC (Monetary Policy Committee) will continue to calibrate the monetary policy settings that balance the risks to domestic inflation and sustainable growth.”

BNM said the latest data showed that Malaysia recorded economic expansion in the last quarter of 2022 and, as a result, growth for last year is expected to exceed the earlier projected range of 6.5% to 7.0%.

However, it said growth this year will be moderate on account of a slower global economy, but will continue to be supported by domestic demand.

BNM said headline inflation averaged 3.4% for the period of January to November last year.

“Over the course of 2023, headline and core inflation are expected to moderate but remain at elevated levels amid lingering demand and cost pressures.

“Existing price controls and fuel subsidies, and the remaining spare capacity in the economy, will continue to partly contain the extent of upward pressures to inflation,” it said.

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