Indonesian central bank give a surprise with the second cut of 7 days reverse repo rate by 25 bps to 5.5 percent - Photo by Bank Indonesia Office

Jakarta (TheInsiderStories) – Indonesian central bank (BI) give a surprise with the second cut of 7 days reverse repo rate (BI-7DRR) by 25 bps to 5.5 percent. Deposit facility  and lending facility rates also dropped by 25 bps to 4.75 percent and 6.25 percent, respectively.

BI’ Governor Perry Warjiyo said n an official statement on Thursday (08/22), the decision has been take to give a stimulus for banking industry. He continued, the policy was in line with low inflation forecast and improving of investment returns on domestic financial assets.

Its expected these indicator as a first step to boost the economic growth from the impact of the global economic slowdown. Currently, central banks in the emerging market lowered their benchmark interest rates to boost the economic growth.

Warjiyo revealed, from the domestic side, the inflation rate is expected at the BI’ target of 3.5 percent by the end of this year. In 2020, inflation will be at 3 percent plus minus 1 percent.

He projected that Indonesian economy in 2019 will be below the midpoint of the 5 to 5.4 percent and in the range of 5.1 – 5.5 percent in 2020. Its expected beside government and public spending, investment and export become the engine of growth.

The governor also sees Current Account Deficit (CAD) will be in the range of 2.5 percent and 3 percent of GDP in 2019 and 2020. Warjiyo revealed, BI will strengthened the external resiliency to attract foreign investment to lowering the CAD in the range of government’ target.

In June 2019, the loan growth was slow down to 9.9 percent from 11.1 percent in May 2019. But he optimistic the loan growth still have a chance to grow the range of 10 – 12 percent in 2019 and 11 – 13 percent in 2020.

Warjiyo stated, BI will use macro-prudential policies to encourage bank lending and expand the financing for the economy. Payment system policies and financial market deepening are also continuously strengthened to support economic growth.

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