KINIBIZ Tiger is puzzled. Is the economy overheating? Has the US raised interest rates? Or is it tapering its quantitative easing even faster than expected? Is there a crisis of confidence in Malaysia? As the answer to each of the questions is no, why should Bank Negara raise interest rates now?

Well, it seems the majority of economists have decided that Bank Negara Malaysia should raise the overnight policy rate or OPR by 0.25 percentage points to 3.25 percent a year from the current 3.0 percent.

But if the central bank sets monetary policy according to majority opinion, it will be a major mistake. No matter what most economists say, Bank Negara must set the benchmark interest rate according to what the evidence is.

Tiger would like to humbly state its own opinion and would courageously like to proclaim that now is NOT the right time to raise interest rates. Oh sure, the market will be disappointed if Bank Negara did not raise the OPR, and yes, the ringgit may come down a bit but really that’s not the criteria at all.

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This article was written by P Gunasegaram.