KUALA LUMPUR, Sept 10 — DAP national chairman Lim Guan Eng said yesterday the Special Task Force on Jihad Against Inflation should be abolished, or be led by Prime Minister Datuk Seri Ismail Sabri Yaakob instead of current chair Tan Sri Annuar Musa.
Speaking at the Kulai DAP dinner yesterday, he called the task force "ineffective, incompetent and irrelevant to stem rising prices” in response to Bank Negara Malaysia (BNM) raising the Overnight Policy Rate (OPR) by 25 basis points to 2.50 per cent.
"Is it worthwhile to sacrifice the people’s socio-economic wellbeing, the country’s post-pandemic economic growth facing pressure from rising prices, higher borrowing costs of businesses and individual loans on houses and vehicles, cash flows of traders and cost of funds of investors?” the former finance minister asked in a speech text made available to the media.
"At the very least, either the committee headed by Annuar should be abolished for being ineffective, incompetent and irrelevant to stem rising prices or he should be replaced by the prime minister."
He expressed doubt over whether BNM raising the OPR will have any effect on curbing rising prices, saying that the inflation faced by the country is not caused by excessive demand but by supply chain disruptions as a result of the Ukraine war and the Covid-19 lockdowns in China.
He highlighted that the OPR hike may result in reduced demand and economic growth without bringing prices down.
He also pointed that the ringgit has breached a 24-year low of more than RM4.50 to the US dollar, apart from recently dropping to a historic low of RM3.25 to the Singapore dollar whilst the Indonesian rupiah has strengthened by 3 per cent this year against the ringgit.
"[The] ringgit’s weakness is not just against the US dollar but also against the currencies of our neighbours, indicating investors’ assessment of the better performance of their economies,” he explained.
He called for the government to stem inflation and renew confidence in the ringgit through good governance, sound fiscal policies, transparency and implementing open tenders to combat corruption.
"This is the price for the government’s failure in curbing inflation and protecting the value of the ringgit that the people and businesses, especially SMEs, have to pay in terms of higher interest rate,” he concluded.
On Tuesday, Lim said BNM should stop hiking its OPR, as raising interest rates has no impact on rising prices.
Analysts previously expressed the belief that BNM could raise the OPR to 3 per cent by next year, saying rate hikes would continue for the remainder of the year amid rising inflation and BNM would continue its policy tightening further in the upcoming Monetary Policy Committee (MPC) meetings.
On May 11, BNM increased the OPR by 25 basis points to 2.00 per cent at its third MPC meeting this year, saying the sustained reopening of the global economy and the improvement in labour market conditions has continued to support the recovery of economic activity.
In July 6, BNM increased the OPR by 25 basis points once more to 2.25 per cent during its fourth MPC meeting this year.