Credit availability under Indonesia’s new interest rate structure
In an effort to reduce the costs of funding for firms to single-digit levels, Indonesia will use a new policy rate framework to guide the country’s interest rates. It is not clear whether banks will expand credit in response.
Bank Indonesia (BI) on April 15 said it would adopt the 7-day reverse repo rate as the country’s new benchmark rate for deposits and lending, effective on August 19. Until then the BI rate – a policy rate announced by the BI Board of Governors – will remain the benchmark. BI will announce both benchmark rates in the interim period.
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