APSN Banner

BI keeps interest rate at 6% as inflation is under control

Jakarta Globe - January 17, 2024

Arnoldus Kristianus, Jakarta – Bank Indonesia (BI) has decided to keep the BI 7-Day Reverse Repo Rate (BI7DRR) at 6 percent, as the inflation rate cools down to 2.61 percent, the lowest in the last 20 years.

"Keeping the BI-Rate at 6% is in line with the pro-stability monetary policy focus, aimed at reinforcing the stability of the rupiah exchange rate and implementing preemptive and forward-looking measures to control inflation within the target range of 2.5 plus-minus 1 percent in 2024," said BI Governor Perry Warjiyo during central bank's Board of Governors Meeting on Wednesday.

The deposit facility interest rate remains at 5.25 percent, and the lending facility interest rate stands at 6.75 percent.

According to BI's statement, the central bank is actively adopting policies to support economic growth, focusing on encouraging bank lending to businesses and households. BI is also promoting digitalization in the payment system, including government financial transactions, to boost transactions and enhance digital economic inclusion.

"BI continues to strengthen the blend of monetary, macroprudential, and payment system policies to maintain stability and support sustainable economic growth," said Perry.

He said that to keep the economy stable and support growth, Bank Indonesia is working more closely with the government. This involves better coordination with the central and regional governments, along with strategic partners. It includes initiatives like the National Movement for Controlling Food Inflation (GNPIP) in different regions.

Teuku Riefky, an economist at the University of Indonesia, predicted that BI would keep the benchmark interest rate at 6 percent, citing the well-managed inflation rate in December 2023 as a factor.

"BI needs to keep the policy interest rate at 6 percent for the next six months. Inflation slowed to 2.61 percent in December thanks to the government's effective measures to counter the impact of El Nino on food prices," Riefky said.

Source: https://jakartaglobe.id/business/bi-keeps-interest-rate-at-6-as-inflation-is-under-contro