Indonesia’s central bank keeps main rate unchanged but hikes deposit facility rate, to cut RRR
Bank Indonesia kept the benchmark 7-day reverse repurchase rate at 5.75%
Indonesia's central bank, Bank Indonesia, maintained its main policy rate at 5.75% on Wednesday, October 21, but raised the deposit facility rate by 25 basis points to 5% and announced plans to lower the reserve requirement ratio for commercial banks in November and December. This decision came in the wake of a sharp decline in the equities market and the rupiah currency hovering near an all-time low.
The central bank's governor, Destri Damayanti, stated that the measures would be implemented in stages to support the rupiah and attract foreign inflow. The rupiah experienced a further decline following MSCI's warning that it might classify Indonesian equities as standalone market status, triggering a significant selloff in the market.
Analysts had mixed opinions on whether Bank Indonesia would hold or increase rates, with 15 expecting the benchmark to remain at 5.75% and 13 predicting a 25 basis points hike. The rupiah had lost over 7% against the US dollar since June, making it the worst-performing emerging Asian currency in 2021.
Written by urgent.news from The Business Times - Companies & Markets's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
