In 2020, the global outbreak of the covid epidemic saw Malaysia implement the strictest flow control order in its history. To mitigate the impact of the OPR on the people, Bank Negara reduced the overnight policy rate (OPR) three times in 2020 and lowered it to its lowest level ever, at 1.75% per annum.
The National Bank’s reduction of the overnight policy rate (OPR) to a level of 1.75% per annum in 2020 has also brought the interest rate on time deposits to a new low level and many people are reluctant to deposit time deposits as a result.
If Bank Negara continues to raise the overnight policy rate, the interest rate on time deposits is likely to reach a level of 3.50% to 4.00% per annum. Prior to the epidemic, Bank used to offer time deposits at 4.28% per annum.
Time deposits cannot be compared to other high-yielding investments because they have the benefit of zero risk and the ability to earn interest steadily at the end of the term without much manipulation.
