Interest Rate in Indonesia

Indonesia Interest Rate | Economic News & Forecasts

Indonesia - Interest Rate

Bank Indonesia keeps rates steady in November, but cuts reserve requirements to boost liquidity

At its 20–21 November monetary policy meeting, Bank Indonesia (BI) left the seven-day reverse repo rate unchanged at 5.00%, as had been expected by market analysts. The Bank also left the deposit facility and lending facility rates stable at 4.25% and 5.75% respectively. However, the Bank announced a reduction in reserve requirements in order to boost credit and domestic demand.

The decision to take a breather followed 100 basis points of easing since June, which was aimed at warding off an economic slowdown against a backdrop of the U.S.-China trade spat. As such, BI felt it had done enough for the time being to support the economy, and opted to evaluate the impact of past rate cuts before considering possible further loosening. Moreover, U.S.-China trade tensions have ebbed somewhat in recent weeks, with talks of a partial trade deal in the works, somewhat reducing pressure on the external sector.

In its communiqué, the Bank did not spell out an explicit path for interest rates going forward, but highlighted that its stance will remain accommodative. Most FocusEconomics panelists see further easing before end-2020.

According to analysts at Nomura: “We continue to expect a policy rate cut in the near term because of BI’s clear dovish signals and pro-growth bias.”

Economists at ANZ Bank comment: “We maintain our view that the current easing cycle is nearing its end and continue to see just one more 25bp rate cut.”

FocusEconomics Consensus Forecast panelists project the seven-day reverse repo rate to end 2020 at 4.70% and 2021 at 4.75%.

Indonesia - Interest Rate Data

2013  2014  2015  2016  2017  
Policy Interest Rate (%)7.50  7.75  7.50  4.75  4.25  

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Indonesia Interest Rate Chart

Indonesia Interest Rate
Note: BI rate in %.
Source: Bank Indonesia.

Indonesia Facts

Bond Yield7.09-0.05 %Nov 21
Exchange Rate14,0880.05 %Nov 21
Stock Market6,117-0.32 %Nov 21

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