BI-Rate Interest Rate Rises, BI Is Optimistic That It Will Not Disturb National Economic Growth

David Sumual, Erwin Haryono and Juli Budi Winantya (Aris Nurjani / VOI)

Director of the BI Monetary Economic Policy Department, Budi Winantya, said that BI's policy of deciding to raise the benchmark interest rate or BI Rate by 25 basis points was 6.25 percent relatively safe against Indonesia's economic growth target.

"BI has a set of instrument policies. BI's stance is not only seen from monetary policy, especially interest rates. Our interest rate is still optimistic that it will not change the range, this policy is intended to strengthen exchange rate stability," said Juli in a discussion on the Latest Economic Development and BI Policy Mix Response, in Samosir Regency, North Sumatra, Sunday, April 28.

In addition, July conveyed that the increase in interest rates or BI-Rate was also a pre-emptive anticipatory measure to prevent unwanted things, as well as a forward looking policy to ensure inflation remains on target of 2.5 percent plus minus 1 percent in 2024 and 2025 in line with the pro-stability monetary policy stance.

Juli said that BI is also preparing incentive instruments to encourage economic growth this year.

Furthermore, July is optimistic that Indonesia's economic growth in the first and second quarters of 2024 is expected to be higher than in the fourth quarter of 2023. This optimism is in line with the strong domestic demand from household consumption during Ramadan and Eid al-Fitr 1445 Hijri.

"We expect a boost from domestic demand. Consumption is still strong even though historically it is relatively lower but there have been improvements," he said.

On the other hand, July said that building investment itself is higher, supported by the continued demand for National Strategic Projects (PSN) in a number of areas and the development of private property as a positive impact of government incentives so that it will boost the economy in the future.

"Meanwhile, our building investment estimates that it will grow better so that it will boost the economy in the future," he said.