Bank Indonesia (BI)'s monetary easing policy has driven down banking credit interest rates throughout 2017, although they remain above 10 percent. Previously, the government aimed for credit interest rates to fall to single digits. The central bank's move was to stimulate economic growth and enhance banking intermediation.
The largest decrease in banking interest rates was for consumer credit. Based on data from the Indonesian Financial Services Authority (OJK)'s Indonesian Banking Statistics, the consumer credit interest rate from December 2016 to October 2017 fell by 62 basis points (bps) to 12.97 percent. This decrease even exceeded the 50 bps decrease in the BI 7-day Repo Rate.
Meanwhile, investment credit interest rates from December 2016 to September 2017 fell by 38 bps to 10.83 percent. Working capital credit interest rates during the same period fell by 36 bps to 11.02 percent. For information, at the BI Board of Governors Meeting on September 15-16, 2017, the central bank again maintained its benchmark interest rate at 4.25 percent.
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