[Asia Economy Reporter Jeong Hyunjin] Indonesia and Malaysia have once again kept their benchmark interest rates at record lows of 3.50% and 1.75%, respectively, to support economic recovery amid the spread of the COVID-19 Omicron variant.
According to Bloomberg on the 20th, the Bank of Indonesia has kept the 7-day reverse repurchase agreement rate, which serves as the benchmark interest rate, unchanged for 11 consecutive months since February last year. The Central Bank of Malaysia has also maintained its record low rate of 1.75% since July 2020.
The central banks of Indonesia and Malaysia made these decisions recently to mitigate the economic contraction effects caused by the spread of the Omicron variant and the worst floods that occurred at the end of last year and the beginning of this year.
Perry Warjiyo, Governor of the Bank of Indonesia (BI), said after the benchmark interest rate decision meeting, "We decided to keep the benchmark interest rate at 3.50% in consideration of inflation stability, the Rupiah exchange rate, and the needs of the financial system. This is part of our efforts to support economic recovery." Governor Perry indicated that while keeping the benchmark rate unchanged, the bank reserve requirement ratio will be gradually raised from the current 3.50%, signaling a move toward normalizing monetary policy.
The Central Bank of Malaysia forecasted this year's economic growth rate to be between 5.5% and 6.5%, but also stated, "Risks remain, including weaker-than-expected global growth, worsening supply chains, and the emergence of variants resistant to COVID-19 vaccines."
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