Bank Indonesia Holds 5.75 Percent Reference Rate, First Since August 2022

BI Governor Perry Warjiyo (Photo: Capture BI Youtube screen)

JAKARTA – Bank Indonesia (BI) has decided to maintain its benchmark interest rate at 5.75 per cent. This was conveyed by the Governor of BI Perry Warjiyo when holding a press conference after the Board of Governors Meeting (RDK) in Jakarta.

According to Perry, this permanent policy also applies to the deposit facility rate which remains unchanged at the level of 5 per cent and the lending facility rate of 6.50 per cent.

"With a thorough assessment, the Bank Indonesia Board of Governors Meeting decided to maintain the BI 7-day repo rate at 5.75 per cent. The deposit facility interest rate will also remain at 5 per cent and the lending facility interest rate will remain at 6.50 per cent", he said on Thursday, February 16.

Perry explained, this decision remained consistent with a pre-emptive and forward-looking monetary policy to ensure the continued decline in inflation expectations.

"Bank Indonesia believes that the BI 7 Days repo rate of 5.75 per cent is sufficient to ensure core inflation remains within the range of 3 per cent plus minus 1 per cent in the first half of 2023, and consumer price index (CPI) inflation returns to the target of 3 per cent plus minus 1 per cent in II 2023", he said.

Perry added, the rupiah exchange rate stabilization policy will continue to be implemented to control imported goods inflation (imported inflation).

"We will strengthen the management of export proceeds through the implementation of Export Proceeds Foreign Exchange (DHE) monetary operations by market mechanisms", he said.

For information, the central bank's move to maintain the interest rate level is the first since August 2022. At that time, BI began gradually raising interest rates from 3.50 per cent to 5.75 per cent in January 2023.