In a statement today, it said the decision to reduce the SRR is part of BNM’s continuous efforts to ensure sufficient liquidity in the domestic financial system.

“This will facilitate banks to better manage liquidity in an environment of greater financial market volatility and provide continued support for financial intermediation activity.

“The SRR reduction will release RM19 billion worth of liquidity into the banking system,” said BNM.

The central bank said the SRR is an instrument to manage liquidity and not a signal regarding the monetary policy stance.

“The overnight policy rate is the sole indicator used to signal the stance, announced through the monetary policy statement released after the meeting,” it said.

Earlier, BNM announced that it was maintaining the overnight policy rate at 3% following the conclusion of its monetary policy committee meeting today.