Bank negara Malaysia cuts statutory reserve requirement to 1%

Bank Negara Malaysia (BNM) has reduced the statutory reserve requirement (SRR) by 100 basis points to one per cent, effective May 16. This decision, made during the Monetary Policy Committee (MPC) meeting, aims to ensure sufficient liquidity in the domestic financial system. The move will inject approximately RM19 billion into the banking system. Kenanga Research notes that this is the first SRR reduction since March 2020. The reduction intends to help banks manage liquidity amid global financial market volatility and support financial intermediation. Analysts believe this move signals BNM's intention to ease funding cost pressures in the banking system. MIDF Research predicts the Overnight Policy Rate (OPR) will remain unchanged for the rest of the year. The current OPR setting is seen as accommodative to sustainable economic growth and consistent with current economic and inflation assessments. They forecast that BNM will hold the OPR steady at 3.00 per cent in 2025.