Indonesia' foreign exchange reserves rose to US$130.5 billion in May from previous month at $127.9 billion, the central bank reported today (06/08) - Photo by the Central Bank Office

JAKARTA (TheinsiderStories) – Bank Indonesia cut its seven day reverse repo rate (BI-7DRR) by 25 basis points to 4.75 percent, said the governor today (02/20). The policymakers also reduce the deposit facility interest rate and lending facility rate by 25 basis points to 4.00 percent and 5.50 percent, respectively.

BI’ Governor Perry Warjiyo said in an official statement, the decision consistent with the central bank target to controlled the inflation within the target range, safe external stability, and as a pre-emptive step to maintain the momentum of domestic economic growth amidst the prospects of global economic recovery in connection with the occurrence of Covid-19.

He adds, the monetary operations strategy continues to maintaining adequate liquidity and supporting the transmission of an accommodative policy mix. Beside, accommodative macro-prudential policies were taken to encourage economic financing in line with the sub-optimal financial cycle while still observing the precautionary principle.

“In this context, Bank Indonesia will adjust the provisions related to the calculation of the macro-prudential intermediation by expanding the scope of funding and financing at overseas bank branches which are destined for the Indonesian economy,” said Warjiyo.

The payment system policy continues to be strengthened to support economic growth, among others through the expansion of the Quick Response Code Indonesian Standard acceptance as well as the electrification of social assistance and financial transactions of regional governments.

“Going forward, we will keep a close watch on global and domestic economic developments in utilizing an accommodative policy mix space to maintain controlled inflation and external stability, and strengthen the momentum of economic growth,” he asserted.

The governor affirmed that the central bank coordination with the government and related authorities continues to be strengthened to maintain economic stability, driving domestic demand, and accelerating structural reforms, including in mitigating the impact of Covid-19.

Earlier, Warjiyo rated the prospect of economic recovery in 2020 is beginning to be seen and supports the continuing decline in global financial market uncertainty. The improvement in the global economy was mainly supported by growth estimates in a number of developing countries that were higher than previously estimated and optimism after the United States (US)-China phase-one trade deal agreement.

“With these developments, the economic growth in 2019 could reach around 5.1 percent and an increase in the range of 5.1-5.5 percent in 2020,” the governor said.

Written by Staff Editor, Emai: