Higher OPR helps to increase average savings deposit rate
13 Oct 2023 04:17pm
The 2024 Budget is expected to build on the foundation of fiscal discipline set by the 2023 Malaysia Civilian Budget, with the aim of providing a clearer roadmap for fiscal reform and the country's financial landscape.- FILE PIX
The Ministry of Finance (MoF) in its Economic Outlook 2024 report released today said the OPR, which was adjusted in May with an increment of 25 bps, brought the OPR to its pre-pandemic level of 3.00 per cent and was subsequently maintained until September 2023.
"Monetary policy will continue to be guided by the mandate of achieving price stability and sustainable economic growth in the long term.
"In carrying out this mandate, the Monetary Policy Committee (MPC) remains vigilant to ongoing developments and how evolving domestic and global conditions will impact the overall outlook of domestic inflation and growth," it said.
On the ringgit, the MoF noted that it began the year on a strong note, appreciating by 3.2 per cent to close at RM4.2677 against the US dollar as at end-January.
However, the ringgit began to depreciate from the middle of February until August, attributed to the hawkish tone regarding the United States’ policy rate and the slowdown of China's economic recovery, said MoF.
"Moving forward, in addition to Malaysia's good economic fundamentals, expectations of the Fed reaching the end of its hiking cycle and China's economic recovery may provide support for the ringgit.
"Since Malaysia adopts a flexible exchange rate regime, the value of the local currency will continue to be market-determined, and its performance will be influenced by global and domestic developments," it said.
On the banking sector, the report noted the growth in total loans outstanding moderated 4.2 per cent to RM2.06 trillion, mainly due to the slower growth in the business segment.
Meanwhile, financing activities in the banking system in all categories for both business and household segments such as loan applications, approvals, and disbursements expanded at a slower pace of 3.6 per cent, 7.0 per cent, and 5.2 per cent, respectively.
In the business segment, loan applications and approvals expanded by 6.8 per cent to RM310.3 billion and 12.4 per cent to RM183.5 billion, respectively, following the expansion in economic activity.
In the household segment, total loans outstanding grew by 5.4 per cent as at end-July.
"Moving forward, the Second Financial Inclusion Framework (2023 - 2026), a four-year strategic roadmap launched in June 2023, will further advance financial inclusion by elevating the people's financial well-being and standard of living.
"This framework complements the Financial Sector Blueprint 2022 - 2026 (FSBP) and takes into consideration new emerging growth angles in financial services and the aspirations of Sustainable Development Goals (SDGs) and environmental, social, and corporate governance (ESG) propositions," it said. - BERNAMA
