Those Of You Who Have Debt Please Be Patient, The Reduction Of The New Interest Tribe OCCURs In The Fourth Quarter Of 2023

Illustration (Photo: Doc. Antara)

JAKARTA The trend of increasing interest rates since 2022 seems to continue to occur until 2023, at least until mid-January when Bank Indonesia (BI) decided to raise the BI rate of 25 basis points (bps) to 5.75 percent.

Even so, the good news is that the central bank assesses that the current benchmark interest rate is sufficient to manage the risk of inflation and maintain exchange rate stability.

The signal was conveyed directly by BI Governor Perry Warjiyo during a press conference after the Board of Governors' Meeting (RDG).

"If there is nothing extraordinary (extraordinary) or unexpected, then adequate words can already answer questions (about the possibility of further interest rates)," Perry said in response to reporters' questions some time ago.

This was agreed by the Treasury & International Banking Director of PT Bank Mandiri Tbk. Panji Irawan.

According to him, inflation's expectations that are getting under control make Bank Indonesia's space to raise the BI rate even more limited.

In fact, Panji believes that the reversal of the situation will occur at the end of the year with a projected interest rate that can slope.

"Maybe flat interest rates will continue and will start to fall in the fourth quarter of 2023," he said through a virtual channel on Tuesday, January 24.

In addition to inflation, the indicator of survival of interest rates (if there are no extraordinary events) can be seen from several other things.

First, the BI rate is already above the economic growth rate with a final record of 5.72 percent in the third quarter of 2022.

Second, the signal of the US central bank The Federal Reserve is believed to only raise the Fed Fund Rate twice in 2023.

So that the possibility of BI adding interest rates is getting smaller in order to maintain the cost of funds of government bonds.

Third, raising interest rates means making people (and also the business world) have additional burdens to pay interest on their debts.

This condition, of course, brings its own pressure to the wheels of the economy.

Moreover, the developing conditions are still filled with continuing uncertainty with the threat of a slowdown in the economy to a global recession.

For information, Bank Indonesia has raised the benchmark interest rate by 225 bps gradually since August 2022.

Previously, the monetary authority set a 3.50 percent interest rate policy or became the lowest in history to address the impact of the pandemic on the economic sector.