Indonesia’s Interest Rate Cut to Record Low in Efforts to Push through the Recession

Bank Indonesia (BI) lowered its 7-day reverse repurchase rate to 3.75%, down 25 basis points, taking the interest rate down to its lowest level since the BI started using the instrument as a benchmark in 2016.

The rate cut came as a response to support the COVID-19-stricken economy, which is now facing its first recession in over 20 years.

BI Governor, Perry Warjiyo, stated that the interest rate cut signalled the loose monetary stance being followed at BI. In addition, the large liquidity expansion also indicated the government’s urgency to support the economy, with BI having injected USD 48.12 billion in liquidity into the banking sector in the year to the 17th of November 2...