Central bank of Indonesia hinted on Thursday that it will begin normalizing policy soon even if benchmark interest rate is unchanged.
The central bank kept sever-day reverse repurchase rate record low at 3.5% at its first monetary policy meeting of 2022. Governer Perry Warjiyo in a briefing in Jarkarta told the central bank will start raising bank’s reserve requirement ratio with an increase of 5% in March.
Bank Indonesia kept the seven-day reverse repurchase rate at a record-low 3.5% at its first monetary policy meeting of 2022, as predicted by all 29 analysts in a Bloomberg survey. GIn a briefing in Jakarta, Gov. Perry Warjiyo said BI will start raising banks’ reserve requirement ratio, with an increase to 5% in March.
“BI is trying to have its cake and eat it too,” preparing to normalize policy while encouraging lending growth through macroprudential measures, said Wellian Wiranto, economist at Oversea-Chinese Banking Corp. in Singapore, as reported by Bloomberg. He added “to that end, a gradual tightening of RRR is in the pipeline too.”