Bank Indonesia Leaves Key 7-Day Reverse Repo Unchanged at 5.25%

August 19, 2016

A new monetary policy framework has been launched, but the main interest rate has been left steady at 5.25%. The 7-Day reverse repo of 5.25% replaces the function of the BI reference rate that had been at 6.5% after four 25-bp cuts earlier this year. The reverse repo rate will be flanked symmetrically by a deposit rate and a lending facility rate, which are respectively 75 basis points below and 75 bps above the 7-day reverse repo rate, i.e. 4.5% and 6.0% in present circumstances. A released statement leaves the door open to more easing in the future, noting a number of favorable developments. These are a managably improved balance of payments, a more stable rupiah, inflation that is expected to end 2016 within the 3-5% target range, and growth that is not excessive. In fact, projected growth was revised down marginally.

Copyright 2016, Larry Greenberg. All rights reserved. No secondary distribution without express permission.



Comments are closed.