BNM’s Surprise SRR Cut Sparks Speculation of OPR Reduction

Marcus Liew
15 hours ago
2 min read

Bank Negara Malaysia (BNM) shocked markets with a 100-basis-point cut in the Statutory Reserve Requirement (SRR) to 1%, a move expected to inject RM19 billion into the banking system.

While BNM clarified that the SRR cut is not a signal of monetary policy direction, economists believe it raises the likelihood of an Overnight Policy Rate (OPR) cut, potentially as soon as July 2025.

Why It Matters:

SRR: Dictates how much banks must hold in reserves. Lower SRR = More cash to lend.
OPR: The key interest rate. A cut would lower borrowing costs and potentially stimulate economic activity.

What Analysts Say:

OCBC:

“SRR cuts often precede OPR cuts. The last time this happened was in 2019–2020.”

UOB:

“The SRR cut is unexpected but helps maintain lending activity amid global uncertainty.”

MIDF:

“It’s a proactive move to support liquidity and credit growth.”

Market Tone: More Dovish

Though the OPR was maintained at 3%, BNM’s latest policy statement dropped terms like “strong” and “resilient”, hinting at softer economic confidence. Analysts interpret this as BNM preparing the ground for rate cuts if conditions worsen.

Outlook:

Firm	Forecast
HSBC	25bps cut in July 2025, if data weakens
OCBC	50bps cut by 1H 2026, possibly earlier
RHB	25bps cut in 2H 2025 if GDP dips below 4%

GDP & Inflation View:

RHB revised Malaysia’s 2025 GDP growth from 5% to 4.5%, with downside risk to 3.5%–4.0% amid trade tensions.
Inflation is expected to remain manageable, with balanced risks ahead.

Bottom Line:BNM is opening the door to rate cuts while managing market expectations. With global headwinds rising, Malaysia’s monetary policy could shift to supportive easing in the months ahead.