Indonesia struggles to reignite loan growth despite deep monetary easing

[JAKARTA] Loan growth in Indonesia is expected to remain subdued despite ample bank liquidity and deep rate cuts, as cautious borrowers and policy uncertainty continue to weigh on the credit cycle.

After cutting its benchmark rate by 125 basis points since last year, Bank Indonesia (BI) has shifted its focus to pushing banks to pass on lower rates.

Still, businesses and bankers warn that cheaper credit will do little to lift borrowing without stronger confidence in the economic outlook.