September 22, 2016
The 7-day reverse repo rate, which has replaced the BI rate as the main operative central bank interest rate, was sliced further to 5.0% at this month’s meeting. According to a released statement, the action coordinates with the government’s efforts to buttress economic growth that’s been somewhat lower than hoped and assumed. Inflation at 2.8% also is under the 3-5% target and near to a 7-year low. The rupiah had risen after the Fed’s decision yesterday, providing maneuvering room for today’s incremental easing in Indonesia. Besides the one-week reverse repo, the bank also reduced by 25 basis points the deposit and lending facility rates to 4.25% and 5.75%, which are symmetrically distributed around the 5.0% key rate. Bank Indonesia’s key interest rates were also reduced this year in each month of the first quarter and later in June.
Copyright 2016, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Bank Indonesia