Bank Indonesia’s Heavy Bond Buying to Continue, Analysts Say

Indonesia’s central bank will buy as much as 200 trillion rupiah ($12 billion) of government debt in the secondary market next year, according to analysts, keeping up a blistering pace of bond purchases that has helped soften the blow of heavy foreign selling.

The bond buying is designed to make sure that Bank Indonesia’s loose monetary policy has a clear impact on the economy by flooding banks with cash, the analysts said. Although the central bank has cut rates by 1.25 percentage points this year, lending rates at commercial banks have so far declined at a much slower pace.