Inflation Drops, Will BI Boost Interest Rates This Month? Check Out Governor Perry's Latest Statement

JAKARTA – Governor of Bank Indonesia (BI) Perry Warjiyo provided an updated view of the latest economic conditions amid ongoing uncertainty. According to him, there is an increasing risk of stagflation in line with the increase in global policy interest rates in the midst of a recovering economy.

Not only that, Perry also assessed that there was an expansion of protectionist policies by various countries which also put pressure on the economic sector. BI itself has the main task of maintaining the stability of the monetary system in the country. One policy that is quite strategic is the determination of the benchmark interest rate.

“Bank Indonesia will continue to monitor global and domestic economic and financial developments, formulate and implement the necessary steps to ensure macroeconomic stability and financial stability, including further adjustments to the policy stance if necessary, and continue to strengthen synergies with the government to accelerate national economic recovery. ,” he said in a press statement earlier this week.

In a VOI note, the Governor of BI once said that his party would raise the benchmark interest rate if there were signs of an increase in core inflation.

"So far the interest rate policy will be maintained at 3.50 percent until there are signs of an increase and fundamental inflationary pressures," said Perry some time ago.

Based on a new report from the Central Statistics Agency (BPS), it was stated that the inflation rate in the country in June 2022 had reached 4.35 percent on an annual basis (year on year / yoy). This level has exceeded the target targeted by BI and the government of 3 percent plus minus 1 percent.

Meanwhile, the core inflation rate in June 2022 is known to be perched at the level of 2.63 percent yoy. It was the highest reading since June 2020.

So, will Bank Indonesia start to raise the BI rate, which is currently still at the lowest level in history? The answer is in the middle of this month after the Board of Governors' Meeting was held.