Bank Indonesia Leaves Key 7-Day Reverse Repo Unchanged at 5.25%

Bank Indonesia Leaves Key 7-Day Reverse Repo Unchanged at 5.25%

August 19, 2016

A new monetary policy framework has been launched, but the main interest rate has been left steady at 5.25%. The 7-Day reverse repo of 5.25% replaces the function of the BI reference rate that had been at 6.5% after four 25-bp cuts earlier this year. The reverse repo rate will be flanked symmetrically by a deposit rate and a lending facility rate, which are respectively 75 basis points below and 75 bps above the 7-day reverse repo rate, i.e. 4.5% and 6.0% in present circumstances. A released statement leaves the door open to more easing in the future, noting a number of favorable developments. These are a managably improved balance of payments, a more stable rupiah, inflation that is expected to end 2016 within the 3-5% target range, and growth that is not excessive. In fact, projected growth was revised down marginally.

Copyright 2016, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

Tags: Bank Indonesia




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