Indonesia Makes Fourth Rate Cut for 2020 to Bolster Recovery from COVID-19

To step up efforts to boost the struggling economy during the COVID-19 pandemic, Bank Indonesia (BI) announced a 25 basis point (bps) reduction in the benchmark 7-day reverse repurchase rate to 4.00% on the 16th of July 2020. This is the fourth rate cut in 2020 and the lowest since 2016.

In addition, BI also lowered the deposit and lending facility rates by 25 bps each, resulting in rates of 3.25% and 4.75% respectively. The reduction in benchmark rate is expected to result in lower interest rates charged by banks on consumer loans, mortgages, corporate loans, bond yields and other instruments.

According to Perry Warjiyo, Governor of BI, the rate cut will fully support economic rec...