BI KEEPS RATE UNCHANGED, BUT CUTS GMW RATIO

Jakarta, 6 Shafar 1437/1 November 2015 (MINA) – Bank Indonesia (BI), the central bank, refrains from slashing its benchmark interest rate, but lowers primary reserve requirement (GWM) for lenders as it seeks to guard rupiah and prop up the economy.

The BI Governor Board meeting on Tuesday decided to hold the basic rate at 7.5 percent for the ninth month amid the prospect of a U.S. Federal Reserve rate hike by the year end, BI Governor Agus Martowardojo said.

In an easing policy move, the meeting lowered primary reserve requirement ratio for banks to 7.5 percent from 8 percent effective December 1, Martowardojo said.

“We expect it can boost financing so that it can prop up the economy, which started picking up at the third quarter,” he told a press conference at the BI Headquarters.

The board meeting also decided to keep deposit facility and lending facility rates unchanged at 5.5 percent and 8.0 percent respectively. Mi’raj Islamic News Agency quoted Xinhua as reporting.

Pressure to slash the main rate was voiced recently Vice President Jusuf Kalla after the economy accelerated at a faster pace of 4.73 percent at the three months ended September, but concerns over possible capital outflows may have prevented the lender from doing so. (T/R07/R01)

Mi’raj Islamic News Agency (MINA)