What Is OPR (Overnight Policy Rate) and Its Impact on Malaysia
•By Maher Alias
Artikel ini juga tersedia dalam Bahasa Melayu
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OPR stands for Overnight Policy Rate. It is used to control Malaysia's monetary policy to keep the ringgit at a healthy level and prevent economic deficits.
Bank Negara Malaysia has set the OPR at 3.25%.
http://www.bnm.gov.my/index.php?ch=mone&pg=mone_opr_stmt
The OPR is a lending rate from Bank Negara Malaysia that is offered to commercial banks in Malaysia that have insufficient funds.
An increase in the OPR will raise costs for banks. Each bank has different costs to bear, such as utility expenses, staff salaries, and others.
The impact of an OPR increase can also hinder banking business. Banks are not charitable organisations; they operate as businesses providing lending services and other financial products.
For example, if Bank Negara raises the OPR, the public will be less inclined to borrow from banks, and this is what hampers a bank's business operations.
Fixed rate loans are typically available to those working in the government sector. The simplest way to understand a fixed rate is that regardless of economic conditions — whether in deficit or surplus — the rate given remains unchanged. Fixed rates are commonly used for home loans and other term loans.
This interest rate is related to the BLR (Base Lending Rate). However, banks now use BR (Base Rate) or BFR (Base Financing Rate) for Islamic finance. This type of interest rate fluctuates according to the country's economic conditions.
This interest rate is more expensive compared to other lending rates. It is commonly used for personal loans or vehicle financing. To learn how each type of interest rate is calculated, readers may visit http://www.bnm.gov.my/.
OPR stands for Overnight Policy Rate. It is the interest rate set by Bank Negara Malaysia (BNM) to regulate monetary policy. The OPR influences the cost of borrowing between commercial banks and, in turn, affects the interest rates offered to consumers on loans and savings.
When the OPR increases, banks typically pass on the higher borrowing costs to consumers. This means monthly repayments for floating rate loans — such as home loans tied to the Base Rate (BR) — will increase. However, fixed rate loans remain unaffected by OPR changes.
Yes. A higher OPR generally leads to higher interest rates on savings accounts and fixed deposits, as banks can afford to offer better returns. Conversely, when OPR drops, savings and fixed deposit rates tend to decrease as well.
The Monetary Policy Committee (MPC) of Bank Negara Malaysia meets several times a year to review and decide on the OPR. Their decision is based on economic indicators such as inflation, GDP growth, employment data, and global economic conditions.
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