Bank Negara Malaysia - On Its Monetary Policy And Independent Role

The market abounded with hot speculations that Governor of BNM Tan Sri Dato' Sri Dr. Zeti Akhtar Aziz is under immense pressure to quit over conflicting views with the government on the rate policy.

Over the past few months ever since our inflationary pressure started to build up in the wake of the rising food and fuel costs, talks started brewing that BNM would have to tighten the monetary policy to fend off the rising cost phenomenon. But they fizzled out, leaving the rate staying put.

Traditionally, central banks are duty-bound to keep inflation in check, ideally to be about 2%. Governments, on the other hand, are more concerned with economic growth. Therefore, the two easily conflict over fixing an appropriate monetary policy to suit their respective goals.

Internationally, calls have been getting louder for central banks to be left independent of governments.

How independent is our BNM? It is heart-rending to see the way Tan Sri Dato' Sri Dr. Zeti's hands are tied up!