Indonesia’s central bank
World Economy

Bank Indonesia Adopts 7-Day Reverse Repo Rate

Indonesia’s central bank began using a new benchmark interest rate it hopes will transmit changes in borrowing costs more quickly, as policymakers seeks fresh ways to boost the economy.
Bank Indonesia left the new benchmark, called the seven-day reverse repo rate, unchanged at 5.25%. Analysts had been split on whether the bank would make a cut on the new rate’s debut, Reuters reported.
Southeast Asia’s top economy has been slowing in recent years as demand for its key commodities exports have dropped, particularly from regional powerhouse China, and policymakers have been scrambling to find new ways to lift the country’s fortunes.
The central bank had already cut its old benchmark four times this year but analysts say that the moves were failing to persuade commercial banks to lower their own lending rates, meaning the changes were not having a major impact on the real economy.
The new rate, which is a shift from the old, 12-month reference rate, has a more short-term focus and the bank hopes it will help them influence markets more quickly and directly.
“Our monetary policies will be more effective and efficient when interpreted by the markets,” said Bank Indonesia governor Agus Martowardojo, referring to the new rate.
While the benchmark rate was left on hold, the lending facility rate - the rate at which commercial banks can borrow from Bank Indonesia — was cut by 100 basis points to six percent.
Despite Friday’s decision, Capital Economics forecast a reduction in the benchmark rate soon.
“With growth struggling and inflationary pressures low, a rate cut is likely sooner rather than later,” it said in a note.
President Joko Widodo came to power almost two years ago on a pledge to boost growth in the G20 economy, but has struggled to get key projects off the ground due to the dim global outlook and Indonesia’s notoriously difficult business environment.
The economy expanded faster than expected in April-June, at 5.18%, but it was still below growth rates of over six percent seen several years ago.

Short URL : http://goo.gl/m3xIbX
  1. http://goo.gl/zMUhOY
  • http://goo.gl/Xz3rH3
  • http://goo.gl/35PQN1
  • http://goo.gl/PQmXKo
  • http://goo.gl/y5Oyts

You can also read ...

The average annual salary for K–12 public-school teachers is roughly $58,000, and they typically spend a sizable chunk  of that on classroom supplies integral to their jobs
Airbnb, the popular platform that lets people rent out their...
Nigeria CB Reports $91b FX Inflow in 2017
The Central Bank of Nigeria, said the aggregate foreign...
S&P, Moody’s Lower Turkey Ratings
Two major global ratings agencies lowered Turkey’s ratings Aug...
China Internet Stocks Fumble
A steep downturn in heavyweight Chinese internet stocks and...
Egypt Keeps Rates Steady
Egypt’s central bank left its main interest rates unchanged,...
Venezuela Devalues Currency by 95 Percent
Venezuela devalued its currency by about 95% ahead of the Aug...
Long Road to Greek Recovery
On Monday, Greece exits the third and final bailout program of...
Russia’s largest electronics chain, M. Video, estimates that about a fifth of its products are bought with credit  or on installment plans as people are more confident about the future.
Russian consumers are borrowing like the boom times are back...