Big Banks Unlikely to Increase Lending Rates Early This Year

Big banks are gearing up for their loan interest policies this year following the central bank’s latest rate hike. These banks avoid increasing loan interest rates too much to keep credit demand high.

Arlina Satiti Mugi Laras

9 Jan 2024 - 18.58
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Big Banks Unlikely to Increase Lending Rates Early This Year

Illustration - Banking credit.

Bisnis, JAKARTA — Major banks will undoubtedly remain the primary choice for the public and businesses when seeking credit. However, the interest rate on loans will be one of the main components that borrowers consider, which would heavily rely on the central bank’s interest rate.

Last year, Bank Indonesia (BI) hiked its rate twice, by 25 basis points each in January 2023 and October 2023. Although there were only two rate hikes last year, in 2022, BI had already raised it five times. As a result, the benchmark interest rate, or BI-Rate, is now at 6%.

However, it takes several months for the banking industry to transmit these central bank rate hikes to their respective loan and savings interest rates. This means that the last increase in the BI-Rate in October 2023 will begin to be felt in bank interest rates at the beginning of this year.

Banks are likely to adjust their loan interest rates in line with the BI-Rate, although market competition will highly influence the extent of the increase. Nevertheless, there is still a possibility that the central bank's interest rate policy will become more accommodative.

Cek Berita dan Artikel yang lain di Google News dan WA Channel
Editor: Yusuf Waluyo Jati
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Big Banks Unlikely to Increase Lending Rates Early This Year

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