- December 3, 2020
- Posted by: admin
- Category: Daily News
- Bank Indonesia (BI) will maintain its loose monetary policy stance and keep its benchmark interest rate low in 2021 to support the economic recovery while pledging to strengthen and develop the country’s digital payment system.
- BI Governor Perry Warjiyo said the central bank would continue to use all its policy instruments to pursue economic recovery in 2021, projecting the economy to rebound by 4.8% to 5.8% of growth.
- “Monetary stimulus will continue in 2021 while the benchmark interest rate will remain low until inflation picks up,” he said during the BI annual meeting on 3 Dec 20.
- Perry expects credit growth to expand by 7%-9% in 2021, on the back of an economic recovery. Lending shrank 0.5% y/y ytd as of Oct 20.
- BI has bought government bonds worth IDR483.5tr through a burden-sharing agreement with the government and as the non-competitive bidder to help fund the country’s fiscal deficit and reduce the government’s borrowing costs.
- The central bank is committed to continuing buying government bonds through auctions as the non-competitive bidder in 2021, Perry said, while ruling out the possibility to continue the burden-sharing agreement, in which BI returns to the government all yields it receives from certain sovereign debt papers.
- Speaking at the same meeting, President Joko Widodo urged BI to take on “a more significant role in the fundamental reforms that we are currently executing”, including a greater contribution to support the real sector and encourage job creation.
- The central bank now expects the economy to shrink by 1%-2% in 2020, while the government expects the economy to shrink by 0.6% to 1.7%.
External Link : https://www.thejakartapost.com/news/2020/12/03/bi-vows-to-keep-rate-low-in-2021-to-support-recovery.html
External Link : https://www.reuters.com/article/indonesia-economy-cenbank/update-2-indonesia-cbank-to-extend-monetary-stimulus-as-president-seeks-more-help-idUSL1N2IJ06U
External Link : https://jakartaglobe.id/business/bank-indonesia-eyes-9-loan-growth-in-2021-pledges-to-keep-interest-low