JAKARTA - Bank Indonesia (BI) has set an increase in the benchmark interest rate by 25 basis points (bps) to 5.75 percent.
BI Governor Perry Warjiyo said the same increase was also set at the deposit facility interest rate of 25 bps to 5 percent percent and the lending facility rate of 25 bps to 6.50 percent.
"This more measurable interest rate hike decision is a further step for front-loaded, pre-emptive, and forward looking to ensure that inflation and inflation's continued decline in expectations in the future," he said during a press conference on Thursday, January 19.
According to Perry, Bank Indonesia believes that the BI rate increase of 225 bps from August 2022 to 5.75 percent is sufficient to ensure core inflation remains in the range of 3 percent plus minus 1 percent in the first semester of 2023.
"Meanwhile, the Consumer Price Index (CPI) inflation returned to its target of 3 percent plus minus 1 percent in the second semester of 2023," he added.
Perry added that the policy of stabilizing the rupiah exchange rate to control imported inflation was strengthened by foreign exchange monetary operations.
"This includes the implementation of instruments in the form of foreign exchange terms (TD) from the Export Results Foreign Exchange (DHE) according to market mechanisms," said BI Governor Perry Warjiyo.
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