BI Is Predicted To Hold Reference Interest Rates At The Level Of 5.75 Percent

Illustration (Photo: Doc. ANTARA)

JAKARTA - Bank Permata economist Josua Pardede estimates that Bank Indonesia (BI) is expected to continue to maintain the benchmark interest rate (BI Rate) at the level of 5.75 percent.

For information, BI has maintained the BI Rate at the level of 5.75 percent for two consecutive months, after January 2025 cutting the benchmark interest rate by 25 basis points (bps) from 6.00 percent to 5.75 percent.

According to him, maintaining the BI Rate at this level indicates a pro-stability monetary policy taking into account BI prioritizing exchange rate stability amid high global uncertainty due to trade wars, inflationary pressures from US tariff policies, and international financial market volatility.

"By maintaining the interest rate to remain at the level of 5.75 percent, BI seeks to maintain the attractiveness of domestic assets, thus preventing capital outflows that have the potential to significantly weaken the Rupiah," he told VOI, Wednesday, April 23.

Josua said, in the short and medium term, global uncertainty is still high enough, thus encouraging investors to take a risk-avoiding stance and shift their capital to safer assets (safe haven).

In addition, Josua conveyed that with the condition of Indonesia's current account deficit (CAD), it has the potential to widen due to the government's pro-growth agenda and increasing imports.

He said that cutting interest rates risks increasing the pressure of the current account deficit and weakening external stability, especially when exports are threatened with weakening due to global tariff wars.