In 2016, the Bank of Indonesia established a new bank interest rate guidelines that required all state-owned banks to apply the defined interest rate within 7 days from date of the Government announcement – this is called the BI-7 Day Reverse Repo Rate (the 7 Day Rate). The Bank of Indonesia only releases a 7 Day Rate in extreme situations, where the economy needs immediate support to maintain economic stability.

On 18 February 2021, the Bank of Indonesia released a 7 Day Rate to reduce bank interest rates for deposits and loans. The reductions are by 2.75% and 4.25% respectively. The Government hopes that this reduction will encourage people to deposit more money in banks and stimulate business through cheaper loans.

In order to further stimulate the economy, damaged by Covid-19, the Bank of Indonesia has issue new Regulations* to allow people to access larger loans to purchase property and cars. The hope is that this increased purchasing power will stimulate small businesses and the economy.

*Regulation No. 23/2/PBI/2021.