There Is Still Uncertainty In The Global Financial Market, Bank Indonesia Has A Room For Interest Parts Until The First Three Months Of 2023

Photo: Doc. Antara

JAKARTA - Bank Mandiri economist Faisal Rachman said the space for Bank Indonesia (BI) to raise the BI-7 Day Reverse Repo Rate (BI-7DRR) rate remained open until the 2023 quarter-I. According to him, raising the benchmark interest rate is a pre-emptive, pre-emptive, and in future view by BI to maintain the stability of the rupiah exchange rate and inflation expectations amidst global and domestic pressures. This is because Indonesia is still overshadowed by uncertainty in the global financial market that can cause outflow capital, which poses a risk to the stability of the rupiah exchange rate and imported inflation pressure., he continued, from within October 2022 the inflation rate reached 5.71 percent year on year (yoy), where BI estimates that the general inflation rate will reach around 5.6 percent with core inflation at 3.5 percent by the end of 2022. From the domestic side, we continue to expect the inflation rate to be around 5 6 percent yoy, at least until the 2023 semester-I, Faisal said in Macro Brief quoted by Antara, Friday 18 November.

He estimates that BI will increase its benchmark interest rate to 5.50 percent by the end of 2022 and is likely to be at the level of 5.75 percent in the first semester of 2023. Because pressure comes from the external and domestic side, we believe BI will continue to increase BI-7DRR to ensure stability, "said Faisal. As is known, in the Board of Governors' Meeting (RDG) on November 16-17, 2022, BI decided to increase BI-7DRR by 50 bps to 5.25 percent. This decision is a step forward in a front-loaded, pre-emptive, and forward looking manner to reduce current high inflation expectations," said BI Governor Perry Warjiyo.