BI Doesn't Have To Wait For The Fed To Lower The Reference Interest Tribe

Bank Indonesia (Photo: Antara)

JAKARTA - Bank Indonesia (BI) ensures that in reducing BI-Rate, there is no need to wait for the policy of the central bank of the United States (US) Federal Reserve in reducing interest rates.

Senior Deputy Governor of Bank Indonesia Destry Damayanti explained that in lowering the benchmark interest rate, his party used independent data or when domestic fundamentals were good so that interest rates could be lowered without having to wait for the Fed.

"If someone asks when BI will lower interest rates, is it waiting for the Fed? I say it's not always like that, we usually use independent data," he said at the Bloomberg Technoz Economic Outlook 2024 activity, Wednesday, February 7, 2024.

According to him, if the domestic economic condition is good, then Bank Indonesia can lower the benchmark interest rate.

"If everything domestic is okay, it's time for us to lower the flowers, even though the Fed has not lowered interest rates," he said.

Destry gave an example that some time ago the Fed raised interest rates to 550 basis points (bps), but at that time BI did not increase the amount as the Fed did and only increased by 250 basis points and continued to optimize other policies.

Destry continued, another BI step is to optimize the monetary policy mix and focus on prostability, be it inflation, exchange rates, and foreign exchange reserves.

According to Destry, the most important thing is domestic economic data which is BI's basic capital in implementing a policy mix to maintain national economic stability.

Destry estimates that the Fed has entered the phase to stop the trend of high interest rates. "Global interest rates, we refer mainly to the Fed rate, we expect it to drop in the second semester of this year," he said.

However, he continued, the economy in the United States (US) has shown strengthening, but inflation in the US has not dropped to the target of 2 percent. So this factor causes the Fed not to intend to lower interest rates in the near future.