BNM Holds OPR at 3.00%, Cuts Reserve Requirement to Support Growth

Published: 14 May 2025
By: Business Point Magazine Editorial Team

Key Highlights

• OPR unchanged at 3.00% for the fifth consecutive meeting

• Statutory Reserve Requirement (SRR) cut by 100 basis points to 1.00%, effective 16 May 2025

• Dovish outlook in response to softer external demand and trade tensions

• Growth forecast tempered but still within comfort zone

Policy Decision and Rationale

On 8 May 2025, Bank Negara Malaysia (BNM) elected to maintain the Overnight Policy Rate (OPR) at 3.00%, where it has stood since May 2023. Alongside this decision, BNM announced a reduction in the Statutory Reserve Requirement (SRR) from 2.00% to 1.00%, effective 16 May 2025, marking its first SRR adjustment since March 2020. 

In its Monetary Policy Statement, the central bank cited the following factors:

1. Global Growth Uncertainties
   Trade tensions and slowing demand among major trading partners have introduced downside risks to Malaysia’s export-oriented sectors.

2. Domestic Inflation and Demand
   Headline inflation eased to 1.4% in March, providing room for accommodative policy without jeopardizing price stability.

3. Financial Conditions
   The SRR cut is designed to inject additional liquidity into the banking system, encouraging lending to businesses and households and supporting credit growth.

Implications for Businesses and Consumers

• Lower Funding Costs: Banks can now deploy extra liquidity for cheaper loans, benefiting SMEs and mortgage holders.

• Continued Stability: By holding the OPR steady, BNM ensures borrowing rates remain predictable, supporting consumer spending and investment decisions.

• Boost to Credit Supply: The SRR reduction frees up roughly RM 20 billion for lending, helping firms navigate domestic and external headwinds.

Outlook and Forward Guidance

BNM’s statement reiterated that monetary policy will remain data-dependent, with further adjustments guided by incoming information on:

• Economic growth both domestically and among key export markets

• Inflation dynamics, especially food and energy prices

• Financial market conditions and credit trends

Economists broadly expect BNM to keep the OPR unchanged through 2025, shifting focus to targeted liquidity measures as needed.

What’s Next

Businesses should consider:

• Reviewing debt profiles to lock in current interest rates

• Exploring new financing opportunities as bank funding costs ease

• Monitoring global trade developments for potential supply-chain disruptions

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