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n its latest effort to push down lending rates to a single digit by year-end, the government will hold regular meetings with monetary and bank officials to monitor the situation.

One such meeting was held on Thursday evening at the Office of the Coordinating Economic Minister and attended by State-Owned Enterprises Minister Rini Soemarno, top officials of Bank Indonesia (BI), the Financial Services Authority (OJK) and the Deposit Insurance Corporation (LPS) as well as top executives of state-owned banks.

Coordinating Economic Minister Darmin Nasution said Thursday'€™s meeting was held to seek common ground and concerted efforts to gradually reduce lending rates as the state-owned banks, which are market movers, each explained their current situation and problems.

'€œThis meeting is not sporadic and we will probably hold one once a month to discuss issues and the obstacles we face and monitor our progress,'€ he said after the meeting.

Darmin denied that the government would force banks to cut lending rates without compromise, but did say that it was its aim to see average bank lending rates drop to below 10 percent by year-end, at least in the corporate segment.

According to recent data compiled by major banks, the corporate segment offers an annual rate of 11.1 percent, while retail, mortgage and non-mortgage consumer loans offer 12 percent, 11 percent and 12.2 percent, respectively.

The micro loan segment currently carries the highest rate at an average of 19.4 percent per year, the data show.

'€œThe efforts to reduce lending rates to a single digit are based on our conviction that we will be able to achieve an inflation rate of 4 percent this year,'€ he said.

Indonesia saw 0.09 percent deflation in February, bringing the year-to-date inflation rate to 0.42 percent and the year-on-year figure to 4.42 percent.

Taking a different stance to former president Susilo Bambang Yudhoyono, who tolerated high interest rates and lower growth in the final years of his leadership to maintain economic stability, President Joko '€œJokowi'€ Widodo has many times stated his preference for lower interest rates and lending rates.

Both Jokowi and Vice President Jusuf Kalla have repeatedly called for lower interest rates and lending rates to help stoke sluggish economic growth, including through '€œcoordination meetings'€ with BI, prompting suggestions that there was political pressure on the central bank and increased intervention in the market.

The government also plans to cap interest rates on time deposits at state-owned companies and government institutions at 5 percent, equal to 1 percent above the inflation rate. However, there is a possibility that the plan may be delayed as its impact on the market will be significant and requires a lower inflation rate.

Following the efforts, the OJK recently distributed a circular to major banks asking for the lenders'€™ '€œattention and commitment'€ to gradually reduce lending rates to a single digit by year-end, beginning as soon as they implement the latest OJK policy on deposit rates.

OJK deputy commissioner for banking supervision Mulya E. Siregar said the agency was preparing a regulation that would offer incentives to banks to reduce their net interest margins, so that they would be able to cut their lending rates without facing lower profitability. However, he declined to mention the details.

LPS commissioner Fauzi Ichsan said the average deposit rate at banks had decreased by only 9 basis points between Feb. 4 and March 4 as Bank Indonesia'€™s key rate cut and lowered primary reserve requirement (GWM) would take time to be effectively transmitted into the banking system.