The Room Is Getting Narrower, BI Boss Kekeuh Sub-Department Of Reference Interest Will Not Go Up Again

BI Governor Perry Warjiyo (Photo: Capture BI Youtube screen)

JAKARTA - Bank Indonesia (BI) Governor Perry Warjiyo revealed that the monetary authority will consistently implement a benchmark interest rate policy of 5.75 percent for the future.

According to him, the increase in the BI rate by 225 basis points (bps) gradually from August 2022 to January 2023 was sufficient to stem the rate of inflation in the expectation range while maintaining the stability of the rupiah exchange rate.

"At the last Board of Governors' Meeting (RDG) it was clear that 225 basis points were adequate. This is clearly clear, there are no more transparent (other than adequate) words with a policy direction, the forward guidance is clear," he said at the launch of the 2022 Bank Indonesia Transparency and Accountability Report (LTABI) on Monday, January 30.

Perry said an interest rate of 5.75 percent could push core inflation down to a level of 3 percent plus minus 1 percent in the first semester of 2023. Likewise with the Consumer Price Index (CPI) inflation which is believed to be able to return to a normal figure of 3 percent plus minus 1 percent in the second semester of 2023.

For information, IHK inflation at the end of 2022 is known to be 5.51 percent. The book is much lower than the central bank's projection which estimates it could penetrate 6.5 percent due to the impact of rising fuel prices (BBM) in September.

Meanwhile, core inflation is perched at the level of 3.36 percent or more sloping than the initial reading of 4.61 percent. On that basis, the monetary authority assesses that the space to raise the benchmark interest rate is increasingly limited this year.

"If there is nothing extraordinary (extraordinary) or unexpected, then adequate words can already answer questions (about the possibility of further interest rates)," said Perry previously.