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All set for new reference rate implementation: BI
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Bank Indonesia Governor Agus Martowardoyo speaks to journalists after a hearing at the House of Representative in Senayan, Central Jakarta, on Monday. (thejakartapost.com/Anton Hermansyah)
B
ank Indonesia (BI) is optimistic that its new reference rate, the seven-day reverse repurchase (repo) rate, will be ready for launch, replacing the BI rate, during the governor’s meeting on Aug 18-19.
BI Governor Agus Martowodojo said the central bank had been holding road shows to many financial centers across the country, as well as the world, to provide detailed information about the new benchmark rate.
"Everything has gone well. In fact, we are still providing explanations to several global investors about the measure that will be officially implemented on Aug. 19 […] The new benchmark is expected to make transmission of BI's monetary policy more effective," he said in Jakarta on Monday.
Agus further explained, starting this week, the central bank would no longer use the BI rate, which is currently set at 6.50 percent, and turn to the reverse repo rate, which stands at 5.35 percent.
Earlier, BI deputy governor Perry Warjiyo said the central bank would speed up transmission mechanisms for both deposit and lending rates, as a result of BI’s decision to gradually cut 100 basis points (bps) of its benchmark interest rate from the beginning of 2016.
As of end of June, the deposit rate had fallen 80 bps, while the lending rate retreated 45 bps. (ags)
