The monetary policy committee (MPC) of Bank Negara Malaysia (BNM) has decided to increase the overnight policy rate (OPR) again, this time by another 25 basis points (0.25%) to 2.5%. This is the third time the OPR has been raised this year, with the previous two hikes – each seeing an increase of 0.25% – happening on July 6 and May 11.
In an official release, BNM said that inflationary pressures have remained high because of elevated commodity prices and tight labour markets, despite continued easing in global supply chain conditions. “Consequently, central banks are expected to continue adjusting their monetary policy settings, some at a faster pace, to reduce inflationary pressures,” said.
The year-to-date, headline inflation is currently at an average of 2.8% and BNM says it is projected to peak in the third quarter of 2022 before moderating thereafter. Meanwhile, underlying inflation, as measured by core inflation, is expected to average closer to the upper end of the 2-3% forecast range this year.
As reported previously, an increase in OPR will have an impact on a bank’s interest rate for borrowings. This could result in increased hire purchase rates, which would make it more costly for car buyers. More than that, banks may be more cautious when it comes to approving loans as historical data shows a co-relation between the OPR and average approval rate for car loans – higher OPR, lower approval rate.
If you’ve placed a booking for a new car recently and decided to take on a loan to finance it, did you manage to get your loan approved? What was your chosen model and the interest rate offered to you? Share your experience in the comments below.
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