Rising OPR: A sign to be financially prudent

SHAH ALAM - The increase in bank interests or Overnight Policy Rate (OPR) in the country is a sign for people to be financially prudent, said experts.

International Islamic Financial Education Centre (INCEIF) economic analyst Professor Madya Dr Baharom Abdul Hamid said financial management included only buying the necessary items, not taking new loans or financing and not purchasing imported goods.

He said in this challenging economic situation, people must know how to differentiate between their wants and their needs.

"People must practice prudent financial management which means that they have to purchase only necessities and avoid purchasing branded or luxury goods.

"During these times, it is important that people do not take up loans or additional financing. For instance, buy a car or a house that you could afford for personal use rather than buying it as an investment," he told Sinar Harian.

Baharom said people needed to realise that the increase of OPR or contractionary policy was made to control the price hikes of items from skyrocketing.

"People often misunderstood Bank Negara Malaysia saying that its action increasing the interest rate was burdensome, but actually it increased the OPR to slow down the rising prices or to stop it from increasing," he said.

Meanwhile, Faculty of Economics and Muamalat, Universiti Sains Islam Malaysia (USIM) senior lecturer Dr Mohd Faisol also shared a similar view saying that people needed to be disciplined in their expenditures for the time being.

He said the increase of OPR for multiple times in a short timespan would also give a negative effect to the people.

"Even though the OPR increase is done to control inflation that is rising, it gives a clear message to the people especially the B40 group to better prepare themselves with a possibility of changes in household expenditures.

"It also gives a message for people to manage their personal and family finances prudently and moderately.

"This is because the increase in the OPR will cause monthly car and house payments, personal financing and several other bank products to experience an increase in payment rates compared to before.

"In this situation, people are advised to make smarter choices," he said.