JAKARTA (TheInsiderStories) – Bank Indonesia (BI) kept the BI seven days reverse repo rate (BI-7DRR) at 5 percent, deposit facility rate 4.25 percent and lending facility rate 5.75 percent at the latest meeting. At the same time, the central bank also relaxed the reserve requirement for commercial and sharia banks by 50 bps to 5.5 percent and 4 percent, respectively.
After the board meeting, BI’ governor Perry Warjiyo, said the policy make to boost the liquidity in the market. He also stated, “The policy was taken to maintain economy growth amid slowing global economy.”
He continued, through the policies, the Bank aimed to drive the loan growth and enlarge financing at the same time stabilizing the financial system. In addition, the policymakers wants to kept the countercyclical capital buffer at zero percent and buffer ratio of macro-prudential policy at 4 percent with repo flexibility at 4 percent.
Going forward, said the governor, BI will monitor global and domestic situation in deciding the monetary policy. Looking at the global situation, Warjiyo rated that the tension between United States (US) and China has impacted the global economy. In this year, the global economy growth is estimated around 3 percent, lower than 2018 level at 3.6 percent.
Even some countries has relaxed its monetary policy by cutting the interest rate, it was not adequate to anticipate the slowdown of global economy growth, he adds. Going forward, Warjiyo saw that the global economy growth getting better, but still cautiously on the tension between the two largest economy in the world.
From domestic side, he revealed, the economy growth was still stable at 5.02 percent in third quarter (3Q) of 2019, although lower than 2Q of 2019 of 5.05 percent. He asserted, the government needs to focus on improving the export as the slowing demand and commodity prices.
“The economy growth will be better in 4Q of 2019, in line with seasonal pattern, so the full year’ economy growth will be 5.1 percent,” he conveyed.
For the inflation rate, BI recorded the decreasing of annual inflation in October 2019 to 3.13 percent in annual basis, from 3.39 percent in October 2019. Warjiyo said, the depreciation will continue until the end of 2019 to around 3.1 percent. He believed that the government will maintain the price stability and coordinate with other parties to stabilize the inflation.
While for the banking loan, in September grow 7.89 percent, lower than August 2019 at 8.59 percent. Warjiyo viewed the banking loan growth will be rise 8 percent by the end of 2019, supporting by deposits growth which in estimating at 8 percent.
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