Bank Indonesia Brings Good News, Loan Interest Rates Are Believed To Continue To Fall

Illustration (Photo: Doc. Antara)

JAKARTA - Bank Indonesia (BI) Governor, Perry Warjiyo, said that bank lending rates have the potential to continue to decline in the future.

"We see that there is still room for a reduction in lending rates", he said in a virtual press conference, Thursday, November 18.

According to Perry, this assumption is based on several aspects. First, the condition of banking liquidity is very loose. Second, Bank Indonesia as the monetary authority will continue to apply a low-interest rate policy.

"The third most important is the difference between loan interest rates and fund interest rates which are still high", he said.

And the fourth is the declining credit risk perception in line with the opening of several economic sectors in productive activities.

"Those are the four factors that we see the direction of lower lending rates in the future will still be open", he said.

Furthermore, Perry said that if the central bank strengthens the policy of transparency in the basic lending rate (SBDK).

"BI will conduct an in-depth analysis of the largest group of banks with a credit share of around 70 percent of the industry", he said.

For information, in the money market and funds market, BI said the overnight interbank money market interest rate and the banking 1-month deposit rate had declined, respectively by 52 bps and 151 bps since October 2020 to 2.80 percent and 3.17 percent in October 2021.

“Economic activity and increased public mobility have encouraged improvements in banking risk perceptions, thus having a positive impact on lowering interest rates for new loans. Bank Indonesia continues to encourage banks to continue lowering loan interest rates as part of a joint effort to increase credit to the business world", concluded Perry.