BNM cuts statutory reserve requirement for banks to 3%

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KUALA LUMPUR (Nov 8): Bank Negara Malaysia (BNM) has lowered the statutory reserve requirement (SRR) ratio from 3.5% to 3% effective from Nov 16, to maintain sufficient liquidity in the domestic financial system.

The last time that BNM reduced the SSR was in February 2016 when the central bank cut the ratio to 3.5% from 4%.

“The decision to reduce the SRR is undertaken to maintain sufficient liquidity in the domestic financial system. This will continue to support the efficient functioning of the domestic financial markets and facilitate effective liquidity management by the banking institutions,” BNM said in a statement today.

The central bank highlighted in the statement that the SRR is an instrument to manage liquidity and is not a signal on the stance of monetary policy.

The Overnight Policy Rate (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, it added.