February 25, 2009

BLR is going down again!

Yesterday, Bank Negara Malaysia announced that the Overnight Policy Rate (OPR) will be reduced by half percentage point to 2% effective March 1, 2009. This means, the Base Lending Rate (BLR) of Malaysian commercial banks will be reduced again. Yes, yes, yes, to all bank customers in Malaysia!

However, based on the experience of previous cuts in OPR rate, do not expect the banks to reduce the BLR in the same margin. So, my guesstimate is that most banks will reduce another 0.25 - 0.3% of BLR of 5.95% currently (for most major banks in Malaysia) to probably around 5.65 - 5.7%.

With the reduction of BLR, that means more bad news for those with fixed (time) deposits. The rates will be falling again and yes, it will be reduced by a larger margin as compared to BLR rate reduction.

Let's just wait for the official announcements from the banks in the coming weeks.

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