BI Again Maintains Reference Interest Rate Of 6 Percent

JAKARTA - Bank Indonesia (BI) has again decided to keep the benchmark interest rate or BI-Rate still at 6 percent in the Board of Governors' Meeting (RDG) which will take place on December 20-21, 2023.

In addition, BI also withheld deposit facility interest rates and lending facility rates so that they remained at 5.25 percent and 6.75 percent.

"The meeting of the Board of Governors of Bank Indonesia on December 20 and 21, 2023 decided to detain BI-Rate so that it remains at 6 percent," said Bank Indonesia Governor Perry Warjiyo at a press conference, Thursday, December 21.

Perry said the decision to hold the benchmark interest rate at 6 percent was a consistency of monetary policy to control the stability of the rupiah exchange rate as an anticipatory measure of the impact of the global financial market uncertainty.

As well as a forward looking step to mitigate its impact on imported inflation of goods so that inflation remains under control in the target of 3 plus minus 1 percent in 2023 and 2.5 plus minus 1 percent in 2024.

"The focus of BI's policy on strengthening the stability of the rupiah exchange rate to control imported goods and mitigate the impact of the global financial market uncertainty," he explained.

Meanwhile, the loose macroprudential policy is strengthened by the effectiveness of implementing Macroprudential Liquidity Incentive Policy (KLM) and reducing the Macroprudential Liquidity Supporting Rate (PLM) to encourage credit/financing for national economic growth.

Acceleration of digitalization of payment systems also continues to be encouraged and improved to expand economic and digital financial inclusion, including digitizing financial transactions of the Central and Regional Governments.

For information, BI again uses the BI-Rate term to replace the BI 7 Days Reverse Repo Rate (BI7DRR) term. Perry said this was done to strengthen monetary policy communication.

However, Perry emphasized that the replacement of the term did not change the meaning and purpose of the BI rate as BI's monetary policy stance and its operationalization still refers to the 7-day reverse return tenor transaction.

Previously, at the Board of Governors Meeting for the period November 2023, BI decided to hold the benchmark interest rate at 6 percent.

In addition, BI also withheld deposit facility interest rates and lending facility rates at the level of 5.25 percent and 6.75 percent.