KUALA LUMPUR, 5 March 2009: The reduction in the overnight policy rate (OPR) by 2% from 3.5% previously is supportive of growth, Bank Negara Governor Tan Sri Dr Zeti Akhtar Aziz said today.
“We have already reduced the OPR. We believe this is supportive of growth,” she said when asked if there was still room for interest rates to come down further.
However, Zeti who was speaking to reporters after launching PT Bank Muamalat Indonesia here, said what was more important is access to financing.
“We are engaging the banks and monitoring the situation to ensure that borrowers have access to financing. It is important to support growth both through consumption and investment demand,” she said.
Asked about the possibility of a recession in Malaysia, Zeti said it would depend mainly on the external sector, whereby there is already a significant decline in imports and exports.
“So far, domestic demand has managed to keep the country in positive territory but the situation is highly volatile,” she explained.
“As such, we have to monitor several agencies including the International Monetary Fund, which has made revisions to global growth.
“We also need to see when conditions stabilise in the international financial system,” she added.
She said that the first pre-condition for recovery to take place is to restore and stabilise the international financial system, see credit flows continue or resume.
“Right now, we have yet to see this stability being restored. This has not yet happened,” she added. — Bernama