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BI vows to keep rate low in 2021 to support recovery
The central bank has cut its benchmark interest rate five times this year to 3.75 percent, its lowest level in history, to support an economy reeling from the pandemic.
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A screen grab shows Bank Indonesia (BI) Governor Perry Warjiyo as he delivers his remarks during the BI Annual Meeting held virtually on Dec. 3. (Courtesy of Bank Indonesia/-)
B
ank Indonesia (BI) will maintain its loose monetary policy stance and keep its benchmark interest rate low in 2021 to support the economic recovery while pledging to strengthen and develop the country’s digital payment system.
BI Governor Perry Warjiyo said the central bank would continue to use all its policy instruments to pursue economic recovery next year, projecting the economy to rebound by 4.8 percent to 5.8 percent of growth.
“Monetary stimulus will continue in 2021 while the benchmark interest rate will remain low until inflation picks up,” he said during the BI annual meeting on Thursday.
The rupiah slightly weakened by 0.11 percent on Thursday while the Jakarta Composite Index (JCI) gained 0.15 percent.
The central bank has cut its benchmark interest rate five times this year to 3.75 percent, its lowest level in history, to support an economy reeling from the pandemic. It has also taken quantitative easing measures to support the economy, including buying government bonds, cutting the reserve requirement ratio and undertaking monetary expansion.
Read also: Surprise rate cut aimed at reviving economy
BI has bought government bonds worth Rp 483.5 trillion (US$34.4 billion) through a burden-sharing agreement with the government and as the non-competitive bidder to help fund the country’s fiscal deficit and reduce the government’s borrowing costs.
