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BANK Negara Malaysia (BNM) has announced a 100 basis point reduction in the Statutory Reserve Requirement (SRR) Ratio, lowering it from 2% to 1% effective May 16, 2025.
In a statement today, the central bank said the move is aimed at bolstering liquidity in the domestic financial system amid heightened financial market volatility.
The SRR reduction is expected to release approximately RM19 billion into the banking system.
“The decision to reduce the SRR is part of Bank Negara Malaysia’s continuous efforts to ensure sufficient liquidity in the domestic financial system,” the central bank said.
“This will facilitate banks to better manage liquidity in an environment of greater financial market volatility and provide continued support for financial intermediation activity,” it added.
BNM clarified that the SRR is a liquidity management tool and does not reflect its monetary policy stance.
It emphasised that the overnight policy rate (OPR) remains the sole indicator of monetary policy direction.
“The SRR is an instrument to manage liquidity and is not a signal on the stance of monetary policy. The OPR is the sole indicator used to signal the stance of monetary policy and is announced through the Monetary Policy Statement released after the Monetary Policy Committee meeting,” BNM said.
The last adjustment to the SRR was made in March 2020, when it was similarly reduced to 2% to support liquidity during the onset of the Covid-19 pandemic. — TMR
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The post BNM cuts SSR to 1% to bolster liquidity appeared first on The Malaysian Reserve.