We reported recently that Bank Negara cuts the Overnight Policy Rate (OPR) to 2.5%. Below is the latest update reported.
Bank Negara is not looking to lower its key policy rate unless there are further developments abroad that will make it necessary, its Governor Tan Sri Dr Zeti Akhtar Aziz said.
“We’ve frontloaded monetary measures because of the lag effect,” she told reporters Wednesday on the second day of the Bank Negara High Level Conference 2009.
The central bank had cut its key policy rate – the overnight policy rate (OPR) – by 25 basis points last November and by another 75 basis points to 2.5% at the end of last month. At the same time the OPR was cut in January, the statutory reserve requirement was also reduced by 150 basis points to 2.0%.
In her opening remarks at the Bank Negara High Level Conference 2009 on Tuesday Zeti said that the global financial crisis has exposed the vulnerabilities of the international financial architecture and there is a need for renewed thinking to reform the global financial system, said Bank Negara governor Tan Sri Dr Zeti Akhtar Aziz.
“Today’s conference takes place at a time when we need to reflect on the many issues that are emerging from the current global financial and economic crisis and the new challenges and lessons it brings to central banks,” Zeti said in her opening remarks Tuesday.
Bank Negara governor Tan Sri Dr Zeti Akhtar Aziz (left) shaking hands with the People’s Bank of China governor Dr Zhou Xianchuan at the Bank Negara High Level Conference 2009 on Tuesday
“The international dimension of these changes calls for an outcome in which the global financial system is less prone to disruption and failures and in which economic progress is a shared prosperity among nations.”
Zeti said the current crisis presented the opportunity to re-evaluate, promote and embrace sustainable long-term solutions, adding that globalisation had a deep impact on the way modern economies function.
“The benefits of globalisation have accrued to diverse communities and regions but it has also brought with it significant risks,” she said, noting how the financial crisis had turned into an economic crisis, with repercussions now being felt on a global scale.
The Bank Negara event, themed “Central Banking in the 21st Century: Implications of Economics and Financial Globalisation,” was held in conjunction with the Malaysian central bank’s 50th anniversary.
Central bank representatives from over 50 countries are attending the two-day conference.
China’s central bank governor Dr Zhou Xiaochuan in his keynote address said while the republic was less impacted by the global economic crisis than the West, it would not be insulated.
He said China may use foreign exchange policy and interest rates to reduce the amount people saved and help boost consumption.
“We need a comprehensive package to help lower savings rate, including exchange and interest rates,” he said, adding that there was a need to change consumption spending.
“China needs to cut savings and boost spending,” he said, adding that traditionally Asians tended to save more than people in the West.
Zhou said China needed to emphasise on increasing internal demand or domestic consumption, especially in the rural areas.
To mitigate the downturn, he said China also needed to further develop its financial and capital markets.
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