BI Cuts BI Rate to 6 Percent
The Bank Indonesia (BI) Board of Governors Meeting (RDG) held on September 17-18, 2024, has decided to lower the BI Rate by 25 basis points to 6.00 percent, the Deposit Facility rate by 25 basis points to 5.25 percent, and the Lending Facility rate by 25 basis points to 6.75 percent.
According to a written statement from Bank Indonesia released by Assistant Governor/Head of the Communication Department, Erwin Haryono, on Wednesday, September 18, 2024, this decision is in line with the prevailing low inflation, the strengthening of the Rupiah exchange rate, and the necessity to bolster higher economic growth.
The last adjustment to the BI Rate occurred in April when it was raised from 6.00 percent to 6.25 percent. From August 2022 to April 2024, the BI has increased the benchmark interest rate by a total of 275 basis points, from 3.50 percent to 6.25 percent.
Looking ahead, BI has indicated that it will continue to monitor the potential for further reductions in the policy interest rate (BI Rate) by considering the developments of these three factors.
Meanwhile, a loose macroprudential policy through the Macroprudential Liquidity Incentive Policy (KLM) remains in effect to encourage increased credit distribution to priority sectors that drive growth and job creation.
The priority sectors include mineral and coal downstreaming, agriculture, plantations, tourism, housing, micro, small, and medium enterprises (MSMEs), ultra-micro enterprises, and the green economy.
As of the second week of September 2024, BI has disbursed liquidity incentives totaling IDR 256.1 trillion. State-owned banks received the largest share of additional liquidity, amounting to IDR 118.6 trillion, followed by private banks at IDR 110.5 trillion, regional development banks (BPD) at IDR 24.4 trillion, and foreign banks at IDR 2.6 trillion.
