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[JAKARTA] Indonesia's government supports Bank Indonesia's (BI) plan to adopt a new benchmark policy rate, saying that the central bank needs an instrument that more effectively influences market liquidity, the chief economics minister said on Wednesday.
Minister Darmin Nasution told reporters that BI talked with the government about the plan, which he said was "in line with the government's expectation". "What BI must influence is the expansion and contraction of liquidity... That requires a suitable instrument," he added.
BI will announce on Friday its change to its benchmark policy rate. Central bank and market sources told Reuters late on Tuesday that it is likely the seven-day reverse repo will replace the current reference rate.