Overnight Policy Rate lowered to 3.25%

Bank Negara has cut its benchmark Overnight Policy Rate (OPR) by 25 basis points to 3.25% from 3.50%, and signalled it was ready to cut the rate further.

This was the first rate cut in over five years. The move, which can be considered well-timed as the economy slows, will result in a lower cost of funds for banks. This, in turn, brings down the cost of borrowing for consumers.

To inject more liquidity into the banking system, Bank Negara also cut the statutory reserve requirement (SRR) for banking institutions for the first time in a decade - from 4% to 3.5% - effective Dec 1.

The last time the SRR was cut was in the midst of the Asian financial crisis, on Sept 16, 1998 when it was reduced to 4% from 6%.