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BI keeps its interest rate at 6.75 percent
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Bank Indonesia (BI) Governor Agus Martowardojo. BI kept its benchmark rate unchanged at 6.75 percent on Thursday at the conclusion of a two-day meeting of its board of governors. (Antara/-)
B
ank Indonesia (BI) kept its benchmark rate unchanged at 6.75 percent on Thursday at the conclusion of its two-day board of governors meeting.
The decision was taken after last week's announcement that it would scrap its 12-month reference rate (BI rate) and to use a shorter term rate.
The central bank will use the BI seven-day repo rate as the new benchmark interest rate as of Aug. 19 in an effort to expedite the reduction of both deposit and lending rates.
"The board of governors policy meeting on April 20 and 21 has decided to maintain the BI rate at 6.75 percent, while the deposit facility rate and lending facility rate stood at 4.75 percent and 7.25 percent, respectively," BI executive director of communications, Tirta Segara, said in a press conference in Jakarta.
In line with the reformulation of the policy rate announced last week, the central bank also announced the BI seven-day repo rate would remain at 5.5 percent.
Thus, BI's term structure of monetary operations is 5.5 percent for a seven-day tenor, 5.6 percent for a two-week tenor, 5.8 percent for a one-month tenor, 6.2 percent for a three-month tenor, 6.45 percent for a six-month tenor, 6.6 percent for a nine-month tenor and 6.75 percent for a 12-month tenor.
"The decision is consistent with the effort to achieve an inflation target of 3.5 to 4.5 percent in 2016 and remains consistent with efforts to boost the economic recovery amid weak global economic growth," Tirta said.
BI has altogether slashed its key rate by 75 bps since at the end of last year. At the same time, the primary reserve replacement ratio has been cut by 150 bps. Banks are expected to immediately respond by lowering interest rates on both deposits and loans. However, the transmission of this policy remains ineffective. (bbn)
