KUALA LUMPUR: Macro policies such as the overnight policy rate (OPR) must be adjusted in line with the strengthening economy, said Bank Negara Malaysia (BNM) Governor Tan Sri Nor Shamsiah Mohd Yunus.
She said such measures are necessary to ensure that the broad macro policies match the country’s economic realities.
“Even as we face headwinds from abroad, the domestic economic activities have already exceeded pre-pandemic levels.
“From real wages and employment prospects, to investments and domestic demand, various indicators point to relative strength in our economy,“ she said in her opening remarks at the launch of the Sasana Symposium 2023 here, today.
According to Nor Shamsiah, the central bank recognises that although the overall economy is in good health, there are some who are still facing economic challenges.
“However, given that the OPR is by design a blunt tool to deliver price stability, more targeted measures are in place to help those who are facing difficulties in meeting their monthly loan repayments,“ she added.
As for the ringgit’s performance, Nor Shamsiah noted that in recent weeks, the local currency has come under renewed pressure, underscoring the need for more than short-term solutions.
The governor added that under the flexible exchange rate, it is reasonable for the ringgit to fluctuate from time to time.
These adjustments allow the domestic economy to adjust to global economic and financial shocks, she said.
“We saw this during the United States Federal Reserve’s rapid and large interest rate adjustments last year, which caused huge shocks to the global economy.
“At one point, the ringgit declined by as much as 11.5 per cent between end-March and early November before appreciating by 7.8 per cent towards year-end, yet the real economy grew by 8.7 per cent during the year, thanks in no small part to the ringgit’s role as a shock absorber,“ said the governor.
In her speech, she stressed the need for a structural reform that would strengthen the country’s growth prospects and encourage more investment opportunities.
“This will increase demand for the ringgit and secure a more enduring appreciation in its value over time,“ she said.
During the event, Nor Shamsiah also officially launched Malaysia’s cross-border QR payment linkages with Indonesia, Singapore, and Thailand.
Themed “Structural Reforms for a Stronger Malaysia”, the one-day Sasana Symposium 2023 features seven panel sessions on various topics, from macroeconomy to pressing issues such as financial scams, digitalising motor insurance claims and social protection. - Bernama