The central bank of Indonesia (Bank Indonesia) cut its key interest rate (BI rate) by 0.25 percentage point to 6.50 percent at Thursday's policy meeting (16/06). Although the central bank had stated at its preceding policy meeting that there remained room for monetary easing, today's move was a surprise that few analysts saw coming. The 7-day reverse repurchase rate, which is set to become the central bank's new benchmark rate on 19 August, was also cut by 25 basis points (to 5.25 percent) at today's policy meeting.

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How does Indonesia rank internationally in terms of happiness, human development, global innovation, and global competitiveness? Below we present a number of global rankings. Generally, Indonesia is ranked among the lower-medium segment, implying the nation has a long way to go before becoming an advanced economy.

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Slowly but surely Indonesia is obtaining the investment grade rating from the world's three key credit rating agencies. Fitch Ratings already reinstated Indonesia's investment grade rating in 2011, a step that was followed by Moody's Investors Service in 2012. Although Standard & Poor's (S&P) has been more careful, there emerged speculation that S&P will assign the investment grade status to Indonesia soon (perhaps in June 2016). Last week, a S&P team visited Indonesia - to study the country's latest policy reforms and developments - and signaled that its assessment is positive.

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The central bank of Indonesia (Bank Indonesia) kept its key interest rate (BI rate) at 6.75 percent at the April policy meeting. This decision was in line with expectations. During the three policy meetings conducted in the January-March 2016 period Bank Indonesia had already cut its BI rate by a combined 75 basis points as inflation and the current account deficit are under control, while the Indonesian rupiah has been strengthening against the US dollar since the start of 2016. Last week, Bank Indonesia announced it will adopt the seven-day reverse repurchase rate (reverse repo) to replace the existing BI rate as the bank's key monetary tool.

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The central bank of Indonesia (Bank Indonesia) plans to adopt a new tool of monetary policy that is to replace the existing benchmark interest rate (BI rate). On Friday (15/04), Bank Indonesia will announce and elaborate on the new policy. Earlier, Indonesia's central bank said it was studying the implementation of a seven-day reverse repurchase rate (reverse repo) as the nation's new benchmark that is to influence borrowing costs and market liquidity more effectively. The new policy would mean Bank Indonesia sells securities with an agreement to buy them back within a seven-day period.

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In the first three monthly policy meetings this year (January-March) the central bank of Indonesia (Bank Indonesia) cut borrowing costs by a total of 75 basis points. Indonesia's benchmark interest rate (BI rate) was cut from 7.50 percent at the year-start to 6.75 percent at Thursday's Board of Governors' meeting. The overnight deposit facility rate and lending facility rate were also cut by 75 basis points, each, in the first three months. The lower interest rate environment in Indonesia signals that the financial fundamentals are strong. This is partly reason behind strong inflows of foreign capital into Southeast Asia's largest economy.

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Shares of Indonesian banks were hit hard on Friday (19/02) after Indonesia's Financial Services Authority (OJK) announced its plan to push state-owned banks net interest margin (NIM) to the range of 3 to 4 percent in a bid to lower the country's lending rates, hence boosting credit growth. NIM is the difference between interest income generated by banks and the amount of interest paid out to the lenders. A higher NIM implies that banks are more profitable. Currently, the average NIM for Indonesia's state-owned banks is between 7 - 8 percent.

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The Indonesian government, central bank (Bank Indonesia) and the Financial Services Authority (OJK) have formed a team that will study and encourage lower lending and mortgage rates in Indonesia - to single digit levels - by the end of 2016. Indonesia's Chief Economics Minister Darmin Nasution explained that this is part of government efforts to boost economic activity in Southeast Asia's largest economy. Indonesia's lending rates have been high due to banks' prudent management and the high cost of funds, hence limiting credit growth as well as economic growth.

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Pada 1 Juli 2015, Peraturan Bank Indonesia No. 17/3/PBI/2015 tentang Kewajiban Penggunaan Rupiah di Negara Kesatuan Republik Indonesia mulai berlaku. Peraturan BI ini, ditandatangani pada 31 Maret 2015, melarang penggunaan mata uang asing dalam transaksi di Indonesia dalam rangka memperdalam pasar domestik rupiah, menstabilkan rupiah (yang telah melemah terhadap dollar AS), dan mendorong ekspansi perekonomian. Undang-Undang sebelumnya (UU No. 7/2011) mengizinkan pihak-pihak yang terlibat dalam kontrak untuk membuat kesepakatan menggunakan mata uang lainnya (bukan rupiah) untuk pembayaran.

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Setelah serangkaian data ekonomi yang baik (terutama data tenaga kerja di Amerika Serikat) pasar menduga Federal Reserve akan menaikkan tingkat suku bunganya pada kuartal kedua atau ketiga tahun ini dan karenanya dollar Amerika Serikat (AS) dapat bullish momentum (hampir menjadi posisi tertinggi selama 11 tahun terakhir). Karena prediksi yield yang lebih tinggi di AS, modal kembali masuk ke negara dengan ekonomi terbesar di dunia ini. Pada saat yang sama, hal ini menimbulkan kerugian besar pada mata uang di negara-negara berkembang, termasuk nilai tukar rupiah yang turun 6% terhadap dollar AS pada tahun ini.

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Bank Indonesia, the central bank of Indonesia, decided to leave interest rates unchanged at the April policy meeting (18-19 April 2018). The benchmark interest rate (the 7-day Reverse Repo Rate) was kept at 4.25 percent for the seventh straight month. Meanwhile, the deposit facility and lending facility rates were maintained at 3.50 percent and 5.00 percent, respectively. Dody Budi Waluyo, who was inaugurated as Deputy Governor on Wednesday (18/04), said an interest rate hike would be counterproductive to the nation's economic growth.

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Rating and Investment Information, Inc (R&I), a Japan-based provider of credit ratings, investment appraisal and information services, announced that it has upgraded Indonesia's sovereign credit rating from BBB- (positive outlook) to BBB (stable outlook) per 7 March 2018. Last December, Fitch Ratings had already upgraded Indonesia's long-term foreign- and local-currency issuer default ratings to BBB (stable outlook), from BBB- previously.

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The central bank of Indonesia (Bank Indonesia) kept its benchmark interest rate - the BI 7-day Reverse Repo Rate - at 4.25 percent at the February Board of Governor's Meeting (14-15 February 2018). Meanwhile, it maintained the deposit facility and lending facility rates at 3.50 percent and 5.00 percent, respectively (effective per 19 February 2018).

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The central bank of Indonesia, Bank Indonesia, left its interest rate regime unchanged - for the fourth straight month - at the January 2018 policy meeting. The benchmark BI 7-day Reverse Repo Rate was kept at 4.25 percent, while the deposit facility and lending facility rates were held at 3.50 percent and 5.00 percent, respectively (effective per 19 January 2018). These decisions were in line with analyst forecasts.

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At the monthly policy meeting on 13-14 December 2017, Bank Indonesia decided to hold the benchmark BI 7-day Reverse Repo Rate at 4.25 percent, while it maintained the deposit facility and lending facility rates at 3.50 percent and 5.00 percent, respectively, effective per 15 December 2017.

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In line with expectations, the central bank of Indonesia (Bank Indonesia) left its benchmark interest rate unchanged on Thursday (16/11). The seven-day reverse repurchase rate (BI 7-day Reverse Repo Rate) was kept at 4.25 percent for a second straight month. Meanwhile, the deposit facility and lending facility rates were kept at 3.50 percent and 5.00 percent respectively.

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The Bank Indonesia (BI) Board of Governors agreed to hold the BI 7-day Reverse Repo Rate at 4.25 percent, while maintaining the deposit facility and lending facility rates at 3.50 percent and 5.00 percent, respectively, effective per 20 October 2017. The decision was in line with efforts to maintain macroeconomic and financial system stability, while stimulating the domestic economic recovery.

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The central bank of Indonesia (Bank Indonesia) made another surprise move by cutting its benchmark BI 7-day Reverse Repo Rate 25 basis points (bps) from 4.50 percent to 4.25 percent at the September 2017 policy meeting. Meanwhile, Bank Indonesia also lowered the deposit and lending facility rates by 25 bps to 3.50 percent and 5.00 percent, respectively, effective per 25th September.

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After concluding its monthly two-day policy meeting on Thursday (20/07) the central bank of Indonesia (Bank Indonesia) decided to leave its interest rate environment unchanged. The BI 7-day (Reverse) Repo Rate (BI-7 day RR Rate) was kept at 4.75 percent, while the deposit facility and lending facility rates were kept at 4.00 percent and 5.50 percent, respectively.

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An International Monetary Fund (IMF) team, led by Luis E. Breuer, visited Indonesia between 7 and 18 November 2016 to conduct the annual Article IV Consultation. The IMF team exchanged views with Indonesian government officials, Indonesia's central bank (Bank Indonesia), and other public agencies, as well as representatives of the private sector, academics, and students on recent economic and financial market developments and the near-to-medium-term economic outlook.

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