A Board of Governors Meeting of Bank Indonesia today decided to raise the bank’s 7-day reserve repo rate to 5.25 percent. Market concensus provided by Reuters and BLoomberg put a 25 basis point increase.
“The BI Board of Governors agreed on 28-29th June 2018 to raise the BI 7-day Reverse Repo Rate by 50 bps to 5.25 percent, while also raising the Deposit Facility (DF) and Lending Facility (LF) rates by 50 bps to 4.50 percent and 6.00 percent respectively, effective 29th June 2018,” Bank Indonesia said in a statement on Friday.
“The policy raise hike decision is Bank Indonesia’s pre-emptive, front-loading, and ahead of the curve move to maintain the domestic financial market’s competitiveness against several countries’ changing monetary policies as well as high global uncertainty.”
The central bank said the policy is supported by ‘dual intervention policy’ in the foreign exchange market as well as the government bond market. It is also combined with “monetary operations strategy to maintain adequate liquidity, particularly in the rupiah money market and interbank swap market.”
here “Moving forward, Bank Indonesia will continue to monitor the domestic and global economic developments and outlook, to strengthen future policy mix responses,” it said.