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Indonesia central bank looking to ease lending rules, may further cut rates

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Indonesia central bank looking to ease lending rules, may further cut rates

Indonesia's central bank is considering relaxing lending rules and may further cut interest rates as it seeks to maintain the economic growth momentum after four rate cuts in 2019, Reuters reported, citing Deputy Governor Dody Budi Waluyo.

Bank Indonesia trimmed benchmark rate four times by 100 basis points this year. The bank also lowered the reserve requirement ratio for conventional commercial banks and Islamic banks to 5.50% and 4.00%, respectively, effective Jan. 2, 2020.

Waluyo said the central bank plans to ease rules on macroprudential intermediation ratio, or its way of measuring a bank's loan-to-deposit ratio, to boost bank lending. Currently, it requires commercial banks to manage the ratio within a range of 84% to 94%. Banks with a ratio level outside the range are required to place bigger reserves with Bank Indonesia, the Dec. 10 report added.