KUALA LUMPUR, May 7 — Economy Minister Rafizi Ramli today said his party’s Pasir Gudang MP was mistaken to believe Bank Negara Malaysia’s latest overnight policy rate increase would jeopardise the unity government’s chances in state elections due in months.
Rafizi also said he spoke to Hassan Abdul Karim at length about the 25-basis point increase the day before the PKR MP chose to issue a public statement urging the former and Prime Minister Datuk Seri Anwar Ibrahim to explain the matter.
Rafizi said he respected Hassan’s right to issue statements critical of the government, but did not believe the concerns were warranted.
“We met on Friday, the night before he made the statement. I told him to not follow the opposition’s sentiments.
“If he is afraid that if the OPR and EPF (Employees Provident Fund) issues will affect the votes in the upcoming state elections, he is wrong; there are more factors that will affect the voting. I already told him that,” he told reporters at his Pandan constituency’s Aidilfitri open house.
Rafizi also told Hassan the latter could always contact him or even Anwar directly to obtain explanation over these and other issues.
The minister said that while he was not personally briefed by the central bank over its rationale for raising the OPR to 3.0 per cent, he agreed the decision was necessary to support the value of the ringgit on the foreign exchange market.
He also pointed out that this was the first increase after two previous pauses, which was against the regional trend.
“If we don’t raise it, we might have a problem in attracting and retaining foreign investors into Bursa Malaysia. So, the increase is a long-term plan by BNM.
“For example, if our interest rate is below three per cent and Indonesia is around five per cent, potential and current investors might look to Indonesia to invest in the stock market. There’s a big economic effect on our currency if BNM didn’t raise it,” he said.
Rafizi said the government was also doing its part to reduce inflation, which should consequently ease pressure on BNM to further increase the OPR.
Yesterday, Hassan urged Rafizi and Anwar to explain the reasons behind BNM OPR hike, saying it was important they did so ahead of the state elections expected after June.
On Wednesday, BNM increased the OPR by 25 basis points, after holding rates steady during the previous two Monetary Policy Committee meetings.