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Jakarta Post

How COVID-19 impacts monetary policy

  • Haryo Kuncoro

Jakarta   /   Thu, February 27 2020   /  01:35 am

Bank Indonesia (BI)’s board of governors decided last week to reduce its seven-day reverse repo rate by 25 basis points to 4.75 percent, marking the first cut in the BI policy rate since October.The decision followed the BI's pronouncement late last year that it would maintain an accommodative policy stance throughout 2020 to support economic growth. Similar signals were given by the BI governor at the beginning of the year.BI’s optimism in supporting economic growth came out when an agreement was reached in the first phase of trade negotiations between the United States and China. Although negotiations continue, what has already been achieved can reduce the tension of global uncertainty.However, optimism suddenly dimmed when the coronavirus disease (COVID-19) began to make headlines at the end of January. Therefore, the benchmark rate cut is described by BI as a preemptive step to m...