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Bankers too slow in adjusting rates: BI
A pedestrian passes the Bank Indonesia building in Central Jakarta
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span class="inline inline-center">A pedestrian passes the Bank Indonesia building in Central Jakarta. The central bank has called on bankers to speed up their efforts in adjusting rates to provide the public with more affordable loans.(thejakartapost.com/Wienda Parwitasari)
The slow loosening of monetary policy in Indonesia is a result of the slow adjustment of banks in cutting their rates, Bank Indonesia (BI) deputy governor Hendar has said.
As the central bank has slashed its benchmark rate for the third consecutive month, with an accumulative cut of 75 basis points (bps) to 6.75 percent, BI has called on domestic banks to trim their deposit rates and lending rates to provide the public with affordable loans.
'There is a transmission lag, of course, as the banking industry needs to adjust,' Hendar said in Jakarta on Monday.
Learning from the past when slow transmission was mostly caused by slow demand in loans and tight liquidity, the central bank also cut its primary reserve requirement ratio (GWM) in March by 100 bps.
'BI began to ease GWM this year with an expectation that transmission would be faster if the liquidity was available,' he said.
The central bank expected the last GWM cut to lead to Rp 34 trillion (US$2.59 billion) of liquidity being cashed out and to spur lending growth by 14 percent year-on-year in 2016. (ags)(+)
