"The liquidity condition is more than adequate so that it continues to push down interest rates and is conducive to economic financing," BI Governor Perry Warjiyo said after announcing the results of the September, 2020 Board of Governors Meeting (RDG) here on Thursday.
The bank liquidity was increased through a reduction in the statutory reserve requirement (GWM) of around Rp155 trillion and a monetary expansion of around Rp491.3 trillion.
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Easing liquidity conditions led to a high ratio of Liquid Assets to Third Party Funds (AL / DPK) of 29.22 percent and a low overnight Inter-Bank Money Market (PUAB) interest rate of around 3.31 percent in August, 2020.
The BI Governor added that the low benchmark interest rate, which is currently being maintained at four percent, contributed to lowering the deposit rate in August, 2020 to 5.49 percent from 5.63 percent in July.
In addition, it also reduced working capital loan interest from 9.47 percent in July to 9.44 percent in August.
"In this condition, the availability of funds is more decisive than interest rates and moreover, interest rates are already low in the context of lending," Warjiyo said.
The demand factor, however, also had an influence, boosted by human mobility, domestic demand, consumption, exports, and investment, he informed.
All of this, he said, was influenced by the fiscal stimulus provided by the government, such as the speed of budget realization, credit restructuring, credit guarantees, and interest subsidies.
“In the future, BI’s monetary expansion, which is currently stuck in the banking sector, is expected to be more effective in encouraging national economic recovery, in line with accelerated realization of the budget and bank credit restructuring program,” he added.
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