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BI cuts reference rate by 25 bps to 5%
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Bank Indonesia deputy governor Mirza Adityaswara (left), Governor Agus Martowardojo (center) and deputy governor Ronald Waas hold a press conference on the reference rate at the BI office in Jakarta on Sept. 22. (JP/Anton Hermansyah)
B
ank Indonesia (BI) has cut its BI seven-day repo rate by 25 basis points (bps), from 5.25 percent to 5 percent to support the monetary easing policy.
Rates on both deposits and loans were also cut by 25 bps to 4.25 and 5.75 percent, respectively. The central bank has acknowledged that credit growth has remained sluggish, with 7.7 percent year on year (y-o-y) growth in July.
"Credit growth is affected by the global economy, which has not recovered yet. It drives down the growth of foreign exchange loans to negative territory, while the growth of rupiah-denominated loans is still high," BI Governor Agus Martowardojo said in press conference at the BI office in Jakarta on Thursday.
The central bank hopes the new reference rate cut will prompt commercial lenders to cut their rates further to help boost the economy. When banks cut deposit rates by 100 bps on a year to date basis, lending rates were cut only by 52 bps.
"We are aware of economic conditions. If economic indicators remain stable until the end of the year, we will have enough room for more monetary easing," Agus said. (ags)
