In defending BNM’s monetary policy committee, Rafizi said Putrajaya’s debt level would be much higher if politicians had free reign over the OPR.

“If the OPR is increased, it indirectly forces us (the government) to spend wisely because the costs to take loans would be higher,” he said after an event at his ministry here today.

Rafizi said BNM’s responsibility in determining the OPR rate must be respected as the government works on alleviating the inflation rate.

He claimed that the Anwar Ibrahim-led administration has managed to reduce the inflation rate consistently, thereby lifting the pressure off the central bank when it came to raising the OPR.

Last Wednesday, BNM increased the OPR by 25 basis points (bps) to 3%, as well as the ceiling and floor rates of the OPR corridor to 3.25% and 2.75%, respectively.

In July 2020, the country’s OPR reached its lowest point at 1.75%. It was increased four times last year – by a total of 100 bps – to 2.75%, which is still below the pre-Covid rate of 3.25% seen in March 2019.

Rafizi believed that the recent hike in the OPR was just a response to the possibility of the US Federal Reserve increasing its benchmark lending rate.

“It is not only about the inflation but also (OPR, as it) involves the inflow of money to this country,” he said.

A day after BNM raised the OPR, the US Federal Reserve raised its benchmark lending rate for a 10th time. It had embarked on an aggressive campaign of rate hikes in March last year to take aim at price increases.