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“There is room for further policy rates cut,” Bank Indonesia (BI) Governor Perry Warjiyo said in a virtual seminar on Friday, adding that the central bank’s focus, however, is on getting the bank lending rates down first.

Warjiyo said: “BI rates are already very low, but lending rates are not coming down yet, and demand is not rising yet. We are more focusing on solving this credit crunch.”

The central bank maintained its 7-day reverse repo rate at 3.75% at its January monetary policy meeting held on Thursday.

After the policy announcement, the Governor said that the interest rate decision consistent with a low inflation outlook, external stability and effort to support the economy.

Market reaction

The Indonesian rupiah came under fresh selling pressure on the above comments, as USD/IDR bounced-off lows and regained the $14K mark.

The spot was last seen trading at 14,030, adding 0.36% on a daily basis.