TheJakartaPost
Please Update your browser
Your browser is out of date, and may not be compatible with our website. A list of the most popular web browsers can be found below.
Just click on the icons to get to the download page.
Banks expect new benchmark rate to take effect in 3 months
The banking industry expects the new benchmark 7-day Reverse Repo Rate (7DRR) to take effect within three months after being implemented on Thursday by Bank Indonesia (BI), according to one banker.
Change Size
The office of Bank Indonesia, which has announced a new benchmark rate taking effect on Friday. (Antara/-)
The banking industry expects the new benchmark 7-day Reverse Repo Rate (7DRR) to take effect within three months after being implemented on Friday by Bank Indonesia (BI), according to one banker.
As the central bank turned to the reverse repo rate at 5.25 percent at its monthly meeting on Friday, the financial market should leave behind the existing benchmark, the BI Rate, which currently stands at 6.5 percent, said Bank Mandiri president director Kartika Wirjoatmodjo.
"However, bringing down bank interest rates is not a simple matter. We must see first the transmission from seven-day tenor to 12-month tenor. Does the 7DRR manage better? Will it bring down the interest rate?" Kartika said in Jakarta on Thursday.
Bank Indonesia will use the new benchmark as a tool for draining liquidity from the system. The central bank sells securities with an agreement to buy them back in seven days with the current interest rate at 5.25 percent. (dan)
