The Bank Indonesia Board of Governors (RDG) meeting on November 16-17, 2016, decided to maintain the BI 7-day Reverse Repo Rate benchmark interest rate at 4.75 percent. Furthermore, the RDG also maintained the Deposit Facility rate at 4 percent and the Lending Facility rate at 5.5 percent.
This policy is a cautious step by the central bank in response to uncertainties in the global financial markets following the United States presidential election. Domestically, macroeconomic stability remains intact, with inflation remaining low and the current account deficit under control. The central bank will also continue to maintain the rupiah exchange rate in line with its fundamentals.
The maintenance of this BI benchmark interest rate, coupled with the uncertainty surrounding the global financial market, makes the target of single-digit bank interest rates difficult to achieve. Banks will maintain their interest rates in anticipation of tight liquidity and increased risks until the end of the year.
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