The Central Bank of Myanmar (CBM) announced on October 3 that it has introduced new monetary policy measures to absorb excess liquidity in the economy.

The statement said that the interest rate was increased in September 2024 due to the strengthening of money circulation in the economy, and the increase in deposits in the banking system due to the increase in digital consumption. These developments have led to a rise in the funds deposited by banks at the CBM, pushing the overall money supply beyond target levels. In order to prevent inflationary pressure and promote the country's economic growth, the Monetary Policy Committee has discussed the policy to control inflation by means such as exchange rate stability and stipulation of minimum reserve requirement, while reviewing the macroeconomic conditions and ensuring economic recovery and achieving the economic growth rate set by the state.

The Monetary Policy Committee meeting decided to absorb the excess funds in the economy by increasing the amount of interest-bearing average excess reserves (IOER) that banks must maintain in Myanmar kyats for 28 days at the CBM and by setting the IOER interest rate at the one-month interest rate of the money market (average).

The CBM said this measure will help ease inflation, stabilize the Myanmar kyat, boost banks’ interest income, and strengthen both the banking sector and overall financial stability.