Surprisingly, board governors of Bank Indonesia (BI) cut the Seven Day Reverse Repo Rate (BI-7DRR) by 25 basis points to 3.50 percent, the Deposit Facility rate at 2.75 percent, and the Lending Facility rate to 4.25 percent - Photo by BI Office

JAKARTA (TheInsiderStories) – Surprisingly, board governors of Bank Indonesia (BI) cut the Seven Day Reverse Repo Rate (BI-7DRR) by 25 basis points to 3.50 percent, the Deposit Facility rate at 2.75 percent, and the Lending Facility rate to 4.25 percent. The decision has been taken to stimulate the national economic recovery.

“This decision is consistent with the forecast of low inflation, the stable Rupiah, as well as a follow-up step to stimulate momentum for national economic recovery,” said the governor, Perry Warjiyo, in a virtual conference on Thursday (02/18).

The policymakers estimated  the inflation rate during 2021 to remain under control within the 3.0 percent ± 1 percent target. The central bank also took policy steps to maintain the exchange rate stabilization and strengthening the monetary operation strategy.

Then, loosening the provisions for down payment for motor vehicle to at least zero percent for all types of new motorized vehicles, to encourage credit growth in the automotive sector. The Bank also loosening the loan to value of property financing to a maximum of 100 percent for landed houses, flats, shop houses, and office.

The incentives will give to banks that meet certain non performing loans or financing criteria, and removing provisions for the gradual disbursement of indent property to drive the property sector. The two policies will effective starting March 1 to Dec. 31, 2021.

Commenting on the strengthening local exchange rate in the current day, he said, was driven by an increase in foreign capital inflows to the domestic financial market followed the global investors’ positive perceptions on the prospects of the domestic economy.

He also sees the strengthening of the Rupiah open in the future supported by a low current account deficit, controlled inflation, high attractiveness of domestic financial assets, and a declining risk premium for Indonesia, as well as large global liquidity.

At the presser, Warjiyo also announced., the central bank has revised down the economic growth in 2021 from 4.8 – 5.8 percent to 4.3 – 5.3 percent due to the low realization of economic growth in the fourth quarter of 2020. The other reason, Indonesian economy is very dependent on the global economic recovery and the national vaccination program targeted by the government taht to be completed by the end of this year.

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