BNI: Russia -Ukraine War Will Make BI Accelerate Raising Reference Interest Rates

JAKARTA - PT Bank Negara Indonesia Tbk. (BNI) reports that the company is still monitoring the latest developments in Eastern Europe, particularly related to military activities between Russia and Ukraine.

Director of Treasury and International BNI Henry Panjaitan said that the conflict inevitably gave its own dynamics to the Indonesian economy. In fact, Henry said that Bank Indonesia (BI) would immediately respond to the developing situation through monetary policy adjustments.

"This certainly has the potential to accelerate the increase in Bank Indonesia's benchmark interest rate," he said in an official statement as quoted by the editorial staff on Wednesday, March 9.

According to Henry, this assumption is based on several things. First, the war situation causes uncertainty to continue. Second, Russia as an important energy supplier to Europe is considered to have an influence on the movement of the world's main commodity prices.

"BNI continues to pay attention to the impact of this conflict on the increase in world oil prices, which ultimately has an impact on rising inflation in Indonesia," he said.

However, Henry assessed that the direct impact of the two warring countries on the Indonesian economy was quite minimal.

This can be seen from Indonesia's exports to Russia which were recorded at 1.49 billion US dollars or only 0.65 percent of total exports. Meanwhile, Indonesia's exports to Ukraine amounted to 416.9 million US dollars, or only 0.18 percent of the total exports.

"BNI hopes that the increase in commodity prices can encourage stronger economic growth in the country," he continued.

"We also want the conflict to end soon in order to provide certainty in doing business and make the investment climate better so that it has a positive impact on the economy as a whole," concluded Henry.