BI Supports Economic Recovery Through Lowest Interest Rate Policy In History

Governor of Bank Indonesia (BI), Perry Warjiyo. (Photo: Doc. Bank Indonesia)

JAKARTA - Governor of Bank Indonesia (BI) Perry Warjiyo revealed that his party will continue to support efforts to recover the economy through a strategic policy mix together with the government. One of the main points of reference is the determination of the reference interest rate.

"Bank Indonesia continues to optimize the entire policy mix to maintain macroeconomic and financial system stability, as well as support efforts to recover the national economy by lowering interest rates six times since last year by 150 basis points," he said in a virtual press statement broadcast by the Ministry of Finance's Youtube page. , Friday, August 6th.

In fact, Perry assesses that the current interest rate is quite low and will continue to be designed slopingly in order to encourage more vigorous economic activity.

“Bank Indonesia will continue to maintain its low interest rate policy with the BI-7 Days Repo Rate remaining at 3.50 percent. This policy is the lowest in history," he said.

According to him, the interest rate set is in line with controlled inflation, maintained rupiah exchange rate, and stability in the national financial system.

“To maintain the rupiah exchange rate, Bank Indonesia took three steps through a triple intervention policy, both spot, DNDF (Domestic Non Deliverable Forward/standard derivative transactions), and purchasing SBN (State Securities) from the secondary market. Alhamdulillah, the stability of the rupiah was maintained amidst the relatively high uncertainty in global financial markets,” he explained.

Furthermore, the BI boss also reported that the central bank continues to add liquidity (quantitative easing) to the money market and banking sector. In his notes, BI has poured liquidity into the banking system of IDR 101.1 trillion until July 19, 2021.

"Thus, since last year or to be precise since the pandemic, Bank Indonesia has implemented quantitative easing of Rp. 833.9 trillion or equivalent to 5.4 percent of GDP (Gross Domestic Product)," Perry concluded.