Indonesia’s central bank has maintained its benchmark rate unchanged at 3.5% but has once again tightened the statutory reserve requirement ratio (RRR) for commercial banks at its meeting on Tuesday.
As expected, Bank Indonesia kept the 7-day reverse repo rate unchanged at 3.5%, the Deposit Facility interest rate at 2.75% and the Lending Facility rate at 4.25%, (See MNI STATE OF PLAY:Bank Indonesia Balances Timing On Tightening).
BI also announced it would “accelerate the normalisation of liquidity policy” through a gradual increase in statutory reserves. The RRR for commercial banks was set to rise to 6.5% by September but this has been increased to 6.0% starting in June and will move to 9.0% by September. The RRR move cuts the amount of cash banks park with BI to drain some banking system liquidity.