Indonesia Holds Policy Rates to Bolster IDR amidst COVID-19 Pandemic

On the 14th of April 2020, Bank Indonesia (BI), kept its benchmark interest rate steady in a move to prop-up the IDR and to maintain external stability amidst the novel COVID-19 pandemic.

Following the reduction of its benchmark rate twice this year in response to COVID-19 and six times in the current easing cycle (starting January 2019) by a total of 150 basis points (bps), BI refrained from reducing further its seven-day-reverse repurchase rate and held the key rate at 4.5%. Meanwhile, the lending and deposit rates were also kept unadjusted at 5.25% and 3.75% respectively.

With the Indonesian economy expected to grow at 2.3% in 2020, lower than the range of 5.1% to 5.5% projected e...