JAKARTA Bank Indonesia (BI) has set an increase in the benchmark interest rate by 25 basis points (bps) to 5.5 percent. The same thing is also applied to deposit facilities which increased by 25 bps to 4.75 percent and lending facility rates by 25 bps to 6.25 percent.
The central bank's move to raise interest rate this time is lower when compared to the previous three months which always raised interest rates of 50 bps each.
"The decision to increase the more measurable interest rate as a continuation to front-loaded, pre-emptive, and forward looking ensures that inflation and inflation's continued decline in expectations so that core inflation is maintained in the range of 3 percent plus minus one percent," he said during a press conference, Thursday, December 22.
According to Perry, Bank Indonesia is also committed to stabilizing the rupiah exchange rate in order to continue to strengthen in order to control imported inflation.
"This is also to mitigate the impact of the strong US dollar and the high uncertainty of global financial markets," he said.
On this occasion Perry also said that the direction of monetary policy in 2023 would still be focused on maintaining stability (pro-stability).
"Similarly, inclusive and green economic and financial programs continue to be directed at encouraging growth (pro-growth). macroprudential policies, digitizing payment systems, deepening the money market," he said.
According to VOI records, the monetary authority has started to aggressively raise interest rates since August 2022 with 25 bps. Consecutively, then September 50 bps, October 50 bps, November 50 bps, and this month 25 bps.
Previously, BI set the lowest interest rate in history with 3.50 percent to help overcome the economic impact of the COVID-19 pandemic.
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