The central bank of Indonesia plans to adopt a seven-dayreverse repurchase rate as its new benchmark rate to enhance the effectivenessof its policy changes, Bloomberg News reported April 12, citing "peoplefamiliar with the matter."
BankIndonesia will replace its current reference rate, which is nottied directly to money markets, according to a plan that is set to be announcedApril 15. The central bank's deputy director of communications, AndiwianaSeptonarwanto, said the central bank will announce plans to strengthen itspolicy framework on April 15.
The seven-day reverse repurchase rate will help the centralbank drain liquidity from the system. The shift to a new benchmark will makemonetary easing more effective in boosting the economy, said Irene Cheung, aforeign exchange strategist at Australia & New Zealand Banking Group Ltd.