Bank Indonesia Governor Perry Warjiyo (Antara/Muhammad Adimaja)

Bank Indonesia (BI) has decided to maintain its policy rate for four successive months while also undertaking several steps to boost the domestic economy.

After a two-day board of governors meeting, the central bank decided to keep its policy rate – the seven-days reverse repo rate – at 6 percent on Thursday, while deposit facility and lending facility rates were also maintained at 5.25 percent and 6.75 percent, respectively.

“The decision is consistent with efforts to strengthen the external stability of the economy, particularly to lower the current account deficit to within a safe level and maintain the attractiveness of domestic financial assets,” said BI Governor Perry Warjiyo in Jakarta on Thursday.

The decision came hot on the heels of the United States Federal Reserve’s dovish outlook hours earlier. The rate-setting Federal Open Market Committee (FOMC) maintained its benchmark policy rate at a range between 2.25 percent and 2.5 percent. The committee members also projected that there would be no more rate hikes for 2019 and foresaw one hike in 2020.

Perry explained that the central bank had taken a number of steps to boost domestic demand, including through financial market deepening as well as preparation for new standards of Quick Response Code (QR Code), the latter of which was expected to provide a more efficient payment system for the country.

Since December, BI has taken an expansionary approach to its monetary operation through term repo and foreign exchange swap transactions, injecting Rp 359 trillion into the financial system between December last year and February, Perry explained.

In an effort to boost loan growth, BI will also increase the Macroprudential Intermediation Ratio (RIM) for banks from between 80 percent and 90 percent to between 84 percent and 94 percent. The new ratio will be in effect as of July 1.

“The policy to increase the RIM [was made] to encourage banks to channel more financing for businesses,’ said Perry, projecting that loan growth for 2019 would be at the upper limit from the central bank’s projection range at between 10 percent and 12 percent.

As of January, loans grew by 12 percent year-on-year (yoy), while the net non-performing loan rate (NPL) remained relatively low at 1.2 percent over the same period, according to BI’s data. (bbn)