This Is Bank Indonesia's Strategy For The Potential Increase In The Fed Fund Rate

Illustration (Photo: Doc. Antara)

JAKARTA Bank Indonesia (BI) is said to have prepared a number of strategies in anticipating the effects of the rambutan from the increase in the interest rate of the United States central bank or the Fed fund rate (FFR).

This was stated by BI Governor Perry Warjiyo in a press conference after the Board of Governors Meeting.

"The first is the intervention in the domestic non-deliverable forward (DNDF) spot," he said, quoted Friday, August 25.

Perry menjelaskan, langkah mitigasi yang ketiga adalah meningkatkan implementasi instrumen penempanan devisa hasil ekspor (DHE) sumber daya alam atau SDA.

"Then the third is to issue Rupiah Bank Indonesia Securities (SRBI) as a monetary operation," he said.

Perry added that the instrument to be issued was market-oriented (premarket) to deepen the money market.

"Later, the underlying will be Government Securities (owned by BI) and this can be interesting for portfolio investment. Therefore, to support the stability of the rupiah exchange rate," he asserted.

On this occasion Perry also stated that there is a possibility that The Federal Reserve will raise interest rates twice until the end of this year.

That assumption is based on the level of US inflation which tends to be high with a labor market that is still tight.

"We went up one time, but there is a possibility of going up two times," he said.

Meanwhile, BI decided to maintain the BI 7-Day Reverse Repo Rate (BI7DRR) at 5.75 percent.

The same applies to deposit facility interest rates and lending facility rates of 5.00 percent and 6.50 percent, respectively.

"The interest rate policy is directed at maintaining inflation and encouraging domestic growth," Perry said.