Banks Yet to Spur Lending Despite Lower Guaranteed Rates

The Deposit Insurance Corporation cut guaranteed interest rate for both rupiah in commercial banks by 25 basis points to 6,5 percent and by 25 bps to 9 percent for savings in Bank Perkreditan Rakyat, while the guaranteed rate for foreign currency-denominated savings was lowered to two percent.

The lower guaranteed interest rate is the second time taken by LPS, following a cut in Bank Indonesia’s benchmark rate. Previously, LPS had also lowered the rates in late July 2019 from seven percent to 6.75 percent in response to the second benchmark interest rate cut. In the benchmark interest rate, the LPS did not immediately lower guaranteed interest rates since it wanted to see the banking response and wait for another BI rate cut.