Indonesia's policy rate is called the BI-Rate, operated through seven-day reverse repo transactions
Background
Commencing 21st December 2023, Bank Indonesia changed the name of its policy rate to the BI-Rate.
The new name replaced the BI 7-Day Reverse Repo Rate, abbreviated BI7DRR, and the change was made to strengthen monetary policy communication.
Bank Indonesia states that the new name does not change the meaning or objectives of the BI-Rate as the monetary policy stance of Bank Indonesia.
Operationalisation still refers to Bank Indonesia reverse repo transactions with a tenor of seven days.
The earlier BI7DRR had been adopted as the policy rate because of its ability to influence the money market, banking industry and real sector quickly.
The BI-Rate is therefore a signalling rate, not a rate at which the public borrows directly.
In plain words
Reverse repo Reverse repurchase transaction — A transaction in which the central bank absorbs funds from banks against securities.
Policy rate Monetary policy rate — The rate through which a central bank signals its monetary policy stance.