Indonesia Utilises Monetary Policy to Stabilise the Economy in Amidst COVID-19 Outbreak

In an attempt to stabilize the economy against the adverse impacts of COVID-19, Bank Indonesia (BI) has reduced its benchmark interest rate for the second time in 2020.

On the 19th of March 2020, BI cut its 7-day reverse repo rate by 25 basis points (bps) to 4.5%, in efforts to maintain a balance between the country’s economic growth and stability in the financial markets, which witnessed significant capital outflows. Perry Warjiyo, BI Governor, stated that the rate cut remains “consistent with controlled inflation in the target corridor”, and is also a pre-emptive measure implemented to ensure growth momentum in the domestic economy.

BI also extended the tenure for...