Longgar Liquidity, Increased BI Rate It Is Believed To Travel Gradually To Banking Credit

JAKARTA - Governor of Bank Indonesia (BI) Perry Warjiyo agrees that the increase in the benchmark interest rate will also increase the interest rate on bank loans. However, he said that this did not happen immediately but needed a gradual process.

Even Perry ensures that the current increase will be slower when compared to normal conditions before the pandemic.

"The effect of the increase in the BI rate on banking interest rates will be slower because the liquidity condition in banking is very loose," he said when answering reporters' questions on Thursday, September 22.

Perry noted that the ratio of liquid tools to third party funds (AL/DPK) is currently monitored at a fairly high level with 26.52 percent.

"We are concerned that the elasticity (affected to the increase in the BI rate) will be lower in conditions before COVID-19," he said.

For information, the monetary authority stated that credit growth in August 2022 was recorded at 10.62 percent year on year (yoy), supported by increases in all types of credit and in the majority of the economic sector.

Perry emphasized that banking interest rates themselves are still in a downward trend, such as in the 1-month banking deposit interest rate market falling by 44 basis points (bps) to 2.90 percent in August 2022 from August 2021.

Then, in the credit market, the loan interest rate showed a 48-bps decline in the same period to 8.94 percent.