JAKARTA - The Bank Indonesia (BI) Board of Governors' Meeting on September 18-19, 2019 has decided to slash the BI 7-Day Reverse Repo Rate by 25 basis points (bps) to 5.25%.
The cut is BI's third this year, having lowered rates by 25 bps to 5.75% in July and by another 25 bps to 5.5% in August. In addition, BI also lowered deposit facility rates and lending facility rates by 25 bps to 4.5% and 6% respectively.
"The policy is consistent with inflation estimates that remain low below the target midpoint and return on investment in domestic financial assets that remain attractive, as well as serving as a pre-emptive step to encourage the momentum of domestic economic growth amid the global economic slowdown," said BI Governor Perry Warjiyo at a press conference at the BI headquarters, Thursday (19/9).
In addition, BI has also decided to relax macroprudential policies to increase the capacity of bank lending and encourage loan demand from business players. Relaxation is also carried out on the loan-to-value (LTV) ratio for property financing loans by 5% and motor vehicle advances in the range of 5%-10%, with additional facilitation for green property and motor vehicle financing loans and advances by 5%.
"These provisions will be effective starting from December 2, 2019," Mr Warjiyo said.
Mr Warjiyo also emphasised that BI will continue to direct its payment system and financial market policies to support economic growth as well as strengthening monetary operations strategies to support efforts to maintain adequate liquidity and improve money market efficiency so that the transmission of an accommodative policy mix can be strengthened.
"Going forward, Bank Indonesia will continue to accommodate an accommodative policy mix in line with low inflation estimates, maintained external stability, and the need to continue to drive economic growth momentum," concluded Mr Warjiyo. (MS)