Bank Indonesia Maintain Reference Interest Rate At 5 Percent

JAKARTA - The meeting of the Board of Governors (RDG) of Bank Indonesia on 22-23 January 2020 decided to maintain the BI 7-Day Reverse Repo Rate (BI7DRR) at 5.00 percent, the Deposit Facility interest rate at 4.25 percent, and the Lending Facility interest rate. by 5.75 percent.

The Governor of Bank Indonesia, Perry Warjiyo, said that this decision was supported by the improvement in the global economy, especially supported by the forecast for growth in a number of developing countries which was higher than previously estimated.

"Several early global indicators related to the manufacturing index, export order index, production index, and confidence index improved in the last two months of 2019, driven by policy stimulus taken in many countries and optimism after the phase 1 US-China trade deal," said Perry at Jakarta, Thursday 23 January.

These developments, Perry continued, positively supported the economic growth of developed countries such as the US, Japan and Europe, in line with the policy steps taken by the authorities in these respective countries.

"Economic growth in developing countries is also potentially higher, including in China, India and Brazil, although there are still a number of domestic problems in these countries that are being resolved by the relevant country's authorities," Perry said.

Overall, he said, optimism for global economic recovery had an impact on reducing global financial market uncertainty and encouraged increased foreign capital flows to developing countries. "The prospect of global recovery strengthens the momentum of increasing domestic economic growth and foreign capital inflows, although geopolitical risks need to be closely watched," said Perry.

Going forward, Bank Indonesia will closely monitor global and domestic economic developments in utilizing the accommodative policy mix space to keep inflation under control and external stability, as well as to support the momentum of economic growth.

"The coordination between Bank Indonesia and the government and related authorities is continuously strengthened in order to maintain economic stability, boost domestic demand, and increase exports, tourism and foreign capital inflows, including foreign investment (PMA)," Perry concluded.