Bank Indonesia hold its 7 days reverse repo rate at 6 percent - Photo by BI Office

Jakarta (TheInsiderStories) – Bank Indonesia (BI) hold its 7 days reverse repo (BI-7DRR) rate at 6 percent. The decision has been taken because the board assessed that the domestic and global situation still have uncertainty.

BI’ Governor Perry Warjiyo¬†explained that the central bank sees the trade war issue between United States (US) and China and other global issues are the matter of the policy. The tension getting high and give impacted to the global economy.

“The trade tension has made the global trade volume down and slows down the economy in several countries,” he said on Thursday (06/20) after the meeting at his office.

Slowing economic growth makes many central banks make dovish policies. It will be a challenge for Indonesia to maintain foreign inflow, he added.

In Indonesia, the board estimated a slowdown economic growth will be seen in second quarter (2Q) of 2019 cause exports declining due to the slow down world demand  However, the positive stimulus from Standard & Poors was a new engine to strengthen the local currency.

Warjiyo revealed, Bank Indonesia will deepen the money market to maintain the strengthening of the Rupiah.

In the finance sector, BI targeting the national loan growth around 10 to 12 percent with the realization during four months period at 11.1 percent. This growth is still below the optimum level, but he promised the Bank will strengthen the macro prudential to drive the loan growth.

One of the macro prudential policies undertaken is through a reduction in statutory reserves to a minimum of 6 percent for commercial banks. The decline is also made for Islamic banks to 4.5 percent.

Written by Staff Editor, Email: theinsiderstories@gmail.com