At its April monetary policy meeting held on Tuesday, Indonesia’s central bank, Bank Indonesia (BI), left its 7-day reverse repo rate unchanged at 4.50%, in line with expectations.
The central bank kept maintained the status-quo after two back-to back rates cuts, as it looks to assess the impact of the previous cuts on the economy battling the coronavirus outbreak.
Governor Warjiyo noted that there is room for further rate cuts.
Additional comments
Liquidity more than adequate in banking system.
Covid-19 epidemic will weaken demand for credit.
Rate decision based on need to maintain stability.
Will increase the intensity of 'triple intervention' to support rupiah.
To increase liquidity through 'quantitative easing'.
Cuts reserve requirement ratio.
Reserve requirement ratio cut to release 102 trln rupiah to financial system.
RRR to be cut by 200 bps for conventional banks, 50 bps for Islamic banks.
Tweaks to rules on macroprudential intermediation ratio for Islamic banks to release 15.8 trln rupiah to market.
New RRR effective May 1.
Relaxes rules on late payment of credit cards.
Monetary policy stance is loose.
We decided not to utilise room for rate cut, taking into account market volatility.
Raises macroprudential liquidity buffer ratio by 200 bps for conventional banks, 50 bps for Islamic banks.
Orders banks to meet the new macroprudential liquidity buffer ratio by buying govt bond in primary market.
FX implications
On the Indonesian central bank’s expected rate cut outcome, the Indonesian Rupiah (IDR) caught a fresh bid-wave against its American counterpart, knocking-off the USD/IDR pair back to test the four-week low of 15,630, where it now wavers.
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