Bank Indonesia Again Defends Reference Interest Rate 5.75 Percent

JAKARTA - Bank Indonesia (BI) is known to maintain the BI 7-Day Reverse Repo Rate (BI7DRR) at 5.75 percent.

The decision was taken by the central bank based on the results of the Board of Governors Meeting which was held earlier this week.

It is noted that BI also maintains deposit facility interest rates and lending facility rates of 5.00 percent and 6.50 percent, respectively.

"The governor's meeting on July 24 and 25 decided to keep the BI 7-Day Reverse Repo Rate at 5.75 percent," said BI Governor Perry Warjiyo at a press conference, Tuesday, July 25.

According to Perry, this decision is consistent with policy stance to ensure inflation remains under control in the range of 3 percent plus minus 1 percent in the remaining 2023 period and 2.5 percent plus minus 1 percent in 2024.

"The focus of monetary policy is directed at strengthening the stabilization of the rupiah exchange rate to control imported goods inflation (imported inflation)," he said.

Perry explained that the steps taken were also in line with efforts to mitigate the impact of the global financial market.

In addition, he continued, the macroprudential incentive policy was intensified to encourage financing loans with a focus on downstreaming, housing, tourism, and inclusive and green financing.

The acceleration of the payment system also continues to be encouraged to expand economic and digital financial inclusion. The mix of macroprudential monetary policy and the Bank Indonesia payment system continues to be directed to support sustainable economic growth," he said.

For information, the attitude of the central bank that does not shift the BI rate has occurred since six months ago.

The last time Bank Indonesia raised interest rates occurred in January 2023 at 25 basis points (bps) from 5.50 percent to 5.75 percent.