Indonesia’s central bank is weighing a fresh liquidity injection to support the country’s state-owned banks.
In a move aimed at easing funding conditions, the Bank Indonesia (BI) is considering a plan that would pump more money into the banking system. The strategy comes as credit growth in the country has cooled, and the government wants to keep banks comfortable in a climate of rising global rates and lingering supply‑chain issues.
The proposed liquidity boost would give state banks—such as Bank Rakyat Indonesia and Bank Negara Indonesia—more operating cash. With less strain on their balance sheets, these institutions could lend more to businesses and households, helping keep the economy moving and protecting the still‑fragile growth that has stalled after the pandemic.
Experts say the move could also curb the rise in loan‑cost pressures that have begun to bite borrowers. “If the banks receive new reserves, the cost of funding usually drops, which could translate into more competitive rates for borrowers,” a banking analyst told Reuters.
The decision is not final, but sides with the BI’s objective to stabilise the financial system amid volatile global markets. The bank has kept its policy rates on hold recently and has avoided cutting too aggressively, preferring a gradual approach that will keep inflation in check.
If the injection is approved, the central bank will announce details on how much liquidity will be provided, the timeframe and conditions attached. Those details will be closely watched by investors and businesses who rely on state‑bank funded loans.
For now, Indonesia’s banking sector remains under close scrutiny, with people watching how the central bank balances the delicate trade‑off between supporting growth and keeping inflation from overheating.
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