Bank Mandiri Predicts BI Will Increase Reference Interest Up To 75 Basis Points To 4.24 Percent This Year

JAKARTA - PT Bank Mandiri (Persero) Tbk (BMRI) is known to have prepared strategic macroeconomic projections related to the signal from Bank Indonesia (BI) that it will raise its benchmark interest rate this year.

Bank Mandiri economist Dian Ayu Yustina assesses that the central bank's move to raise the BI rate will almost certainly occur in the near future. Even so, he can't predict when this will start.

"So far, we still expect BI to raise interest rates between 50 and 75 basis points this year," he said when speaking to reporters via virtual channels on Wednesday, June 22.

According to Dian, there are a number of strong indicators that form the basis for the company's assumptions. First, the domestic inflation rate, which has continued to climb since the beginning of the year. Second, BI's efforts to maintain the stability of the rupiah exchange rate amid the threat of weakening due to the normalization of monetary policy in developed countries.

“We may need to pay attention to BI's stance, which is very considerate of the core inflation rate. So, this is what we have to see progress until the end of 2022," he said.

For information, currently the benchmark interest rate of Bank Indonesia is still at the level of 3.50 percent and is the lowest in history. This figure has persisted since 2020 in response to economic pressure due to the pandemic.

Meanwhile, the announcement of the new BI rate will be broadcast by the central bank tomorrow, June 23, after the Board of Governors' Meeting is over. If the state-owned bank's prediction is correct, the interest rate will reach 4 percent to 4.25 percent by the end of 2022.