BI Reaffirms Will Not Raise Interest Rates Because Core Inflation Continues To Drop

Illustration (Photo: Doc. Antara)

JAKARTA Bank Indonesia (BI) remains consistent and will not raise the benchmark interest rate in the future. BI Governor Perry Warjiyo said the decision was based on the latest developments that made the central bank not have the urgency to raise interest rates.

"This (current interest rate) is sufficient. It's enough," he said during a press conference in Jakarta on Thursday, March 16.

Perry explained that the benchmark interest rate policy was based on expectations and future inflation projections, especially int, i.e. the impact on economic growth.

So it's not directly one-to-one direction with American interest rate, The Fed Fund Rate. We have autonomy in setting monetary policy. Now inflation is down faster, such as core inflation which is now 3.09 percent of our target for the whole year. 3 percent plus minus 1 percent and getting more under control," he said.

Meanwhile, for general inflation or based on the Consumer Price Index (JCI), Perry said the key to the decline was in the food sector.

"This JCI inflation strategy is in the control of food inflation. Then why is it still above 4 percent? Yes, later in September because (the current high figure) is from the low base effect (which was low last year). Look at the controlled and low inflation of the JCI month to month," he said.

"So from the basic consideration of core inflation and IHK inflation, our statement at the BI level of 5.75 percent is sufficient," continued Perry.

Meanwhile, regarding external factors, the BI boss admitted that he had prepared a special strategy to maintain the benchmark interest rate did not budge from his current position.

The method is to stabilize the rupiah exchange rate through a monetary intervention policy. This is to control imported inflation and mitigate the impact of global turmoil for the stability of our financial system," he said.

Meanwhile, the results of the March 2023 edition of the Board of Governors' Meeting (RDG) decided to keep the BI rate at the level of 5.75 percent. This is the second time that Bank Indonesia has not changed the benchmark interest rate since last February.