BI Keeps BI Rate at 6.50% - Bank Sentral Republik Indonesia
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October 21, 2020

No. 11 /  26  / PSHM/ Humas

Today, Bank Indonesia has decided to keep the BI Rate at 6.50%. In the view of the Board of Governors, the monetary relaxation since December 2008 with BI Rate easing 300 bps to 6.50% offers ample support for the economic recovery process and bank intermediation. At 6.50%, the BI Rate level is also deemed consistent with achievement of the 2010 inflation target, set at 5%±1%.

The Board of Governors is confident of gathering momentum for improvement in the domestic economy. Various indicators point to steadily rising expenditures on private consumption, driven by the availability of consumer financing and consumer confidence in the economic outlook. Externally, exports are mounting in line with the economic improvement in the region led by China and India. Regarding prices, inflation was up in August 2009 in keeping with the seasonal trend with the onset of the Ramadan fasting month, but is set to ease further in the final months of 2009 with support from the appreciating rupiah exchange rate, low imported inflation and falling public expectations of inflation. Looking forward, inflation in 2010 is forecasted to return to normal alongside renewed strength in domestic economic activity and commodity prices.

In the financial sector, financial system stability remains sound overall. The banking system is showing improved response to monetary relaxation with steady expansion in bank lending and progressive adjustment in bank lending rates. In aggregate terms, banking liquidity is sufficient for bank financing of the economy. At the micro level, the banking industry is in stable condition, reflected in a robust capital adequacy (CAR) at 17% and subdued NPLs at below 5%.

With steadily mounting optimism for improvement in the economy, lending is forecasted to maintain expansion as the uncertainties in the real sector continue to fade. Commitments by some banks to lower their deposit rates are expected to prompt even further reductions in loan interest rates alongside increased bank lending. Bank Indonesia will keep a close watch on the operation of these commitments and also pursue added measures to strengthen banking efficiency with the objective of promoting even further cuts in loan interest rates. In monetary operations, beginning Monday, 7 September 2009, Bank Indonesia will offer Repo transactions in the 3-month tenor alongside existing Repo instruments in a move designed to keep banking liquidity at adequate levels and anticipate growing needs in keeping with the improved lending outlook.

Looking forward, Bank Indonesia will continually monitor global economic developments and take the necessary measures to safeguard macroeconomic stability while maintaining a conducive climate for the economy.

A complete account of the deliberations of the September 2009 Board of Governors’ Meeting, presenting macroeconomic developments, monetary policy and the outlook for 2009, will be published in the Monetary Policy Report (MPR).

Jakarta, 3 September 2009
Bank Indonesia

Office of the Governor

Dyah N.K. Makhijani



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