The Bank Indonesia (BI) Board of Governors meeting held on September 20 and 22, 2017, decided to lower the BI 7-day Reserve Repo Rate benchmark interest rate by 25 basis points (bps) to 4.25 percent. This is the second rate cut this year. Furthermore, the central bank also lowered the Deposit Facility rate by 25 bps to 3.5 percent and the Lending Facility rate by 25 bps to 5 percent, effective September 25, 2017.
The Executive Director of BI's Communications Department stated that this reduction remains consistent with the low realization and projection of 2017 inflation, the controlled current account deficit, and takes into account external factors related to the planned Fed Fund Rate policy and the normalization of the United States central bank's balance sheet.
This interest rate cut is expected to support improvements in banking intermediation and domestic economic recovery. "BI will continue to coordinate with the Government to strengthen the policy mix in order to maintain macroeconomic stability and strengthen economic recovery," said Agusman.
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