Encouraging Economic Growth, BI Boss Says There Is A Room For Lowering Interest Rates

BI Governor Perry Warjiyo (Photo: Antara)

JAKARTA - Bank Indonesia (BI) has expressed its commitment to boost Indonesia's economic growth in the future. To note, President Prabowo Subianto targets economic growth of 8 percent during his reign.

Bank Indonesia Governor Perry Warjiyo said that he was optimistic that economic growth in 2025 would achieve better performance than in 2024.

Bank Indonesia projects that economic growth in 2025 is lower than expected at 4.7 percent-5.5 percent. Even so, Perry is optimistic that next year's economic growth will increase in the range of 4.8 percent-5.6 percent.

"The growth will increase in the next two years and will continue to rise to a higher level to next years," at the launch of the 2024 Indonesian Economic Report (LPI), Wednesday, January 22.

In addition, Perry is also optimistic that inflation will remain under control in the range of 2.5 percent plus minus 1 percent.

He emphasized that the stability of the rupiah will continue to be maintained in order to encourage economic growth. In addition, credit is estimated to grow between 11 and 13 percent, and economic digitization will continue.

"We are optimistic that Indonesia is united, synergizing is not only stable but also growing higher amidst the continued global geopolitical turmoil," he said.

However, Perry said that the party was still wary of various global turmoil, with Bank Indonesia's policy direction continuously being directed to support stability and economic growth.

"Therefore, we have explained that for monetary policy we direct to maintain stability and economic growth," he said.

Perry conveyed that in the Board of Governors' Meeting (RDG) some time ago he decided to lower interest rates by 25 basis points (bps) to 5.75 percent, because his party was confident that inflation was low and needed to contribute to economic growth.

"We continue to pay close attention to the space for movement on how later interest rates can be lowered, of course, by looking at the dynamics of existing dependent data," he said.

Perry added that his party will continue to maintain exchange rate stability and increase liquidity for banks to distribute credit, including the Macroprudential liquidity incentive policy to priority sectors.

Until the second week of January 2025, Bank Indonesia (BI) recorded that the Macroprudential Liquidity (KLM) incentives that had been distributed reached Rp 295 trillion since this incentive existed.

"We continue to encourage digitalization in the fields of financial, micro, and also for government financial transactions, and other policies," he said.