THE INFLUENCE OF MONETARY POLICY: THE INTEREST RATE CHANNEL ON THE DEVELOPMENT OF INDONESIA'S BANKING INDUSTRY

Abstract

The Covid 19 pandemic caused various countries to implement expansionary monetary policies to prevent an economic crisis. The current economic problems stem from external factors and are detrimental to the internal economy in Indonesia. This condition requires special policies such as active monetary intervention. One of the effects of monetary policy in supporting development priorities and increasing welfare is the transmission of the interest rate channel. The interest rate channel monetary policy affects aggregate demand in the business world amid the economic slowdown. The analysis used is descriptive qualitative with data vulnerability for 2016-2020. The application of the interest transmission monetary policy has not been optimal. The central bank is still focused on inflation set by the government. Coordination with other regulators such as the Financial Services Authority and partners related to national banking needs improvement. This coordination is to support national economic recovery through the interest rate transmission line policy.