BI Policy is Considered Effective but Not Able to Reverse External Pressure

JAKARTA - Bank Permata Chief Economist Josua Pardede assessed Bank Indonesia's (BI) policies such as maintaining interest rates, purchasing SBN, and increasing SRBI auctions were quite effective in mitigating external pressures, although the impact has not completely eliminated the pressure.

He explained that Bank Indonesia also continues to strengthen its intervention steps in the foreign exchange market, both domestically and internationally, through various instruments such as NDF, DNDF, spot market transactions, to the purchase of SBN in the secondary market.

According to him, this effort is supported by the foreign exchange reserves position which reached 148.3 billion US dollars at the end of March 2026.

Josua said this policy was considered important to maintain stability while suppressing excessive volatility, even though external pressures still exist and the potential for foreign capital outflows remains open.

"So, the mix of BI policies is quite effective as a shock absorber, but it is not enough to reverse the external pressure completely as long as global sentiment is still fragile. The rupiah is therefore still prone to be vulnerable, and foreign funds can still flow out if geopolitical news worsen again," he said in a statement. , quoted Wednesday, April 22.

Furthermore, he estimated that the room for a further reduction in the BI Rate was increasingly limited or even delayed and BI would likely need to maintain interest rates at the current level for a longer period in order to maintain rupiah stability.

According to him, as long as the pressure from energy prices, geopolitical risks, exchange rate weakening, the potential for widening the current account deficit, and the high risk premium for Indonesia still persists, a stable interest rate policy is important to maintain the attractiveness of rupiah assets.

"The current interest rate also helps maintain the yield gap with other countries, holding back capital outflows, and anchoring inflation expectations," he explained.

Josua said the main scenario in this RDG is that BI will again maintain interest rates and new opportunities for reduction will open if a number of conditions are met simultaneously.

He gave examples such as easing geopolitical tensions in the Middle East, stable oil price declines, consistent strengthening of the rupiah, more stable foreign capital flows, and clarity on the direction of global interest rate policies.

According to him, as long as these factors have not materialized, BI is expected to keep interest rates at the current level.