Jakarta. Bank Indonesia (BI) decided to maintain the benchmark interest rate (BI rate) at 6.25 percent. Meanwhile, the deposit facility rate is kept at 5.5 percent and the lending facility rate is 7 percent. 

"This decision is consistent with the pro-stability monetary policy, as a preemptive and forward-looking step to ensure that inflation remains within the target of 2.5±1 percent in 2024 and 2025. This includes maintaining the effectiveness of managing the inflow of foreign capital and the stability of the rupiah exchange rate," said BI Governor Perry Warjiyo in a press conference following the Monthly Board of Governors Meeting on Wednesday.

He said that the central bank continues to implement macro-prudential policies and a pro-growth payment system to support sustainable economic growth. Loose macro-prudential policies are being pursued to encourage bank credit/financing to businesses and households.

"Infrastructure and the structure of the payment system industry, as well as expanding digital payment access," said Perry.

Furthermore, he stated that to maintain macroeconomic stability and support sustainable economic growth amidst high uncertainty in the global financial markets, BI is strengthening the mix of monetary, macro-prudential, and payment system policies.

BI is enhancing policy coordination with the central government, local governments, and strategic partners, including the National Movement for Controlling Food Inflation (GNPIP) programs in various regions under the Central and Regional Inflation Control Teams (TPIP and TPID), as well as the Acceleration and Expansion of Central and Regional Government Transaction Digitalization (P2DD).

"BI will continue to strengthen pro-stability monetary policies and enhance synergy with the central and regional governments so that inflation in 2024 and 2024 remains controlled within the range of 2.5±1 percent," explained Perry.

Previously, macroeconomic and financial market economist at the University of Indonesia Teuku Riefky predicted that BI would maintain the benchmark interest rate at 6.25 percent. This is because Indonesia's economy is in a better condition after facing significant pressure on prices and exchange rates for several months.

"After BI decided to raise the policy interest rate last month, there seems to be no urgency to change the policy interest rate in the Board of Governors Meeting," explained Riefky.

He emphasized that with the end of El Nino and the active role of the government in stabilizing food supplies through imports successfully lowering food prices and overall inflation levels. The inflation pressure from food prices has subsided during the 2024 Eid al-Fitr period compared to the last three years.

This will be a positive catalyst to maintain overall inflation in line with BI's target of 1.5%-3.5%. However, the potential risk of inflation is still visible and must be mitigated properly.

"Prolonged external pressure has weakened the rupiah in recent weeks. If this trend continues, it could have a negative impact on domestic price levels through import inflation," concluded Riefky.

Add as a preferred source on Google +