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Jakarta Post

Loosening monetary policy for COVID-19

  • Kristianus Pramudito Isyunanda


Jakarta   /   Fri, July 3 2020   /  01:00 am
BI 7-day reverse repo rate movements.(JP/Hengky)

For the third time this year, Bank Indonesia (BI) has decided to adjust its policy rate, lowering its BI 7-day reverse repo rate (BI-7DRRR) by 25 basis points to 4.25 percent in mid-June. The new policy rate was announced soon after the government decided to reopen the economy, starting on June 8. Compared to other countries, it seems that Indonesia has been better at managing the economic impacts of COVID-19. Macroeconomic indicators have started to improve. The exchange rate of the Indonesian rupiah against the US dollar has improved, precisely in line with capital inflows. The tipping point might be bottoming out. Ever since the COVID-19 epidemic hit the economy, BI started to loosen its monetary policy stance. This was not only a proper but also a necessary response to manage the macroeconomic dynamics. The overall downward economic trend ought to be followed by a move to ease ...