JAKARTA - The Bank Indonesia (BI) Board of Governors’ Meeting on July 17-18, 2019 has decided to slash the BI 7-Day Reverse Repo Rate (BI 7DRRR) or the benchmark interest rate by 25 basis points (bps) to 5.75%.
“The policy was pursued in line with the continued low forecast of inflation going forward and the need to push the momentum of economic growth amid decreasing uncertainty in global financial markets and a controlled external stability of the Indonesian economy,” stated BI Governor Perry Warjiyo at a press conference at the BI headquarters, Thursday (18/7).
“The monetary operations strategy remains directed at ensuring the availability of liquidity in the money market and strengthening the transmission of accommodative monetary policy.”
The rate cut is in line with the prediction that the US Federal Reserve will adopt a dovish stance this year, including by lowering the Federal Fund Rate (FFR) or the US benchmark interest rate by 50 bps for the first time since 2008. In addition, BI also forecasts this year’s inflation rate at 3,5% +1, lower compared to the previous year.
The central bank’s macroprudential policy, Mr Warjiyo added, remains accommodative to encourage bank lending and expand financing for the economy. In addition, payment system policies and financial market deepening have also been strengthened to support economic growth.
“Going forward, Bank Indonesia views that there is still room for accommodative monetary policy in line with the low inflation forecast and the need to push the momentum for further economic growth," concluded Mr Warjiyo. (MS)