Ladies And Gentlemen Who Have Debt, Get Ready, Soon The Trend Of Low Interest Rates Will End

Illustration (Photo: Doc. Antara)

JAKARTA - The signal for an increase in banking interest rates is increasingly felt after the Central Statistics Agency (BPS) officially provides a report regarding the inflation rate which continues to increase.

In a release yesterday, Head of BPS Margo Yuwono said that inflation in April 2022 was recorded at 3.47 percent year on year (yoy). This figure was the highest since August 2019, which at that time was at the level of 3.49 percent.

The core inflation group also rose to 2.60 percent yoy or the highest since June 2020.

The Head of the Fiscal Policy Agency (BKF) of the Ministry of Finance, Febrio Kacaribu, also agreed with the increase in inflation. According to him, the current conditions indicate that national economic activity is at a better level.

"The rising core inflation reflects people's continued recovery in purchasing power," he said in a press statement quoted on Tuesday, May 10.

The Ministry of Finance, which is the government's representative, has confirmed that economic activity is on the right track of recovery.

Now, the 'hot ball' is in the hands of Bank Indonesia (BI) as the monetary authority and becomes the policy maker for banking reference rates in the country.

In a press conference at the end of last year, BI Governor Perry Warjiyo had revealed that the interest rate adjustment would only be implemented if there were signs of rising inflation.

“We will continue to pay attention to inflation developments, especially core inflation. If the core inflation goes up, the interest rate will adjust," Perry said on Friday, December 24, 2021.

To note, currently the benchmark interest rate set by Bank Indonesia is the lowest in history at 3.50 percent.

This means that the main banking product, namely credit, is currently implementing the most flat interest rate policy in line with the BI rate reference. Thus, if Bank Indonesia takes steps to increase interest rates, it is certain that banking institutions will also raise their interest rates.

This situation will of course have an impact on the community (customers) who become debtors because they have to pay higher interest obligations than before.