BI maintains benchmark interest rate at 3.5 percent

Jakarta (ANTARA) - The meeting of Board of Governors (RDG) of Bank Indonesia (BI) on April 19-20, 2021, reached a decision to maintain the benchmark interest rate, or the BI Seven-Day Reverse Repo Rate (BI7DRRR), at 3.5 percent.

"This decision is in line with the need to maintain stability of the rupiah exchange rate and safeguard it from the impact of high uncertainty in the global financial markets despite low inflation forecasts," BI Governor Perry Warjiyo stated at a virtual press conference in Jakarta, Tuesday.

Warjiyo also ensured that his party will unwaveringly support further national economic recovery by optimizing the accommodative monetary and macroprudential policy mix and expediting digitization of the payment system.

The BI governor explained that support will be offered through nine steps, with the first being to strengthen the rupiah exchange rate policy while holding ground in the market through triple intervention to maintain stability in the exchange rate in accordance with market fundamentals and mechanisms.

The second approach is to continue to bolster the monetary operation strategy to support the accommodative monetary policy stance.

The third step aims to increase the use of BI sukuk instruments (SukBI) in tenors of one week to 12 months in order to strengthen sharia monetary operations that have been in effect since April 16, 2021.

The fourth is to continue the accommodative macroprudential policy by maintaining a countercyclical buffer (CCB) ratio at zero percent; a macroprudential liquidity buffer ratio (PLM) of six percent, with repo flexibility of six percent; and a sharia PLM ratio of 4.5 percent, with repo flexibility of 4.5 percent.

Fifth, strengthening transparency of the bank's prime lending rate (SBDK) and continuing coordination with the government and relevant authorities to expedite transmission of the monetary policy through bank lending rates and increase credit and financing to the business world.

The sixth is to extend the validity period of the SKNBI pricing policy of Rp1 from BI to banks and a maximum of Rp2,900 from banks to customers from initially ending June 30, 2021, to December 31, 2021, to support acceleration of the nation’s economic recovery.

The seventh is to strengthen the QRIS policy to encourage the acceleration of inclusive and efficient digitalization of the economy and finance by increasing the QRIS transaction limit, from Rp2 million to Rp5 million, effective from May 1, 2021.

The QRIS MDR tariff reduction for merchants in the category of public service agencies (BLU) and public service obligation (PSO), from 0.7 percent to 0.4 percent, to take effect from June 1, 2021.

The eighth step pertains to ensuring security, reliability, smoothness, and availability of payment system services and rupiah currency management in the face of Eid al-Fitr 1442 H.

Lastly, facilitating the implementation of trade and investment promotions as well as disseminating information of the use of local currency settlement (LCS) in collaboration with related agencies.

Investment and trade promotions will be held in Japan, Singapore, the United States, China, France, and the United Kingdom in April and May 2021.

Moreover, the central bank decided to maintain the deposit facility rate at 2.75 percent and the lending facility rate to stay unchanged at 4.25 percent.

Source: Antara News

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