JAKARTA (Yosefardi) – Economic liquidity, or broad money (M2), expanded at 8.7% (yoy) in June 2016, up from 7.6% (yoy) the month earlier supported by growth of quasi-money component and securities excluding stocks.
M2 growth accelerated as banks were more inclined to lend and. The growth of foreign assets also supported the M2 growth. The banking sector disbursed outstanding loans totalling Rp4,193.6 trillion at the end of June 2016, with growth accelerating from 8.1% (yoy) one month earlier to 8.1% (yoy), elevated by lending for productive sector.
Bank Indonesia eased monetary policy in the reporting period, to which the banks responded by lowering lending rates and deposit rates. The banking sector lowered lending rates to 12.38% from 12.5% in May.
Furthermore, the banking industry also reduced their rates on 1, 3, 6 and 12-month term deposits respectively from 7.21%, 7.96%, 7.90% in May to 7%, 7.75%, and 7.81% in June.