BI Officials Hold Board Of Governors Meeting, Fate Of Reference Interest Rate Determined This Week

Illustration (Photo: Doc. Antara)

JAKARTA - Bank Indonesia (BI) at the beginning of this week will hold a Board of Governors Meeting (RDG) with one of the main agenda of the meeting related to setting the benchmark interest rate. This is known from the annual schedule of the RDG that was launched by the central bank some time ago.

"The August 2022 Board of Governors Meeting will be held on Monday-Tuesday, 22-23 August," said BI as quoted by the editorial staff on Monday, 22 August.

For information, in the last press statement last July, the BI RDG decided to keep the BI 7-Day Reverse Repo Rate (BI7DRR) at 3.50 percent. This level has been used by Bank Indonesia since 2020 and is the lowest interest rate in history in response to the pandemic conditions that have occurred in the past two years.

"This decision is consistent with the estimated core inflation that is still under control amidst the risks of global economic impact on domestic economic growth," said BI Governor Perry Warjiyo at a press conference last month.

Indeed, BI's move to keep interest rates flat has the potential to create capital outflows amid the trend of increasing interest rates in developed countries such as the United States (US). However, the central bank officials did not budge and did not want to be talkative to join in raising interest rates due to considerations of economic fundamentals in the country.

“The increase in the Fed Funds Rate (US interest rate) does not necessarily make BI raise the benchmark interest rate. Bank Indonesia always refers to core inflation and national financial stability," said Perry.

The BI boss also emphasized that the core inflation rate in July 2022, which was 2.89 percent, was still below the central bank's expectations of 2.99 percent, even though CPI inflation had shot up to 4.94 percent. in the last two years? The answer lies in the press conference to be held tomorrow, August 23, 2022.