If There Is No Extraordinary Incident, BI Makes Sure The Interest Tribe Will Not Rise Again

JAKARTA - Bank Indonesia (BI) Governor Perry Warjiyo revealed that a row of consecutive 225 basis points (bps) benchmark interest rates from August 2022 to January 2023 was sufficient to control inflation according to the set target.

According to Perry, the BI rate is currently very adequate to achieve the core inflation target of 3 percent plus minus 1 percent in the first semester of 2023 and the Consumer Price Index (CPI) inflation will return 3 percent plus minus 1 percent in the second semester of 2023.

"This is also in line with the faster-than-expected decline in inflation," he said at a press conference after the Board of Governors' Meeting (RDG), Thursday, January 19.

The signal of the monetary authority that is already through is enough was reflected when Perry answered reporters' questions regarding the opportunity to continue increasing interest rates in the following months.

"The increase in interest rates until January is sufficient to ensure inflation remains in the target range. These adequate words are of course based on the information we collect and also the basis for future projections," he said.

Perry pun menyatakan bahwa bank sentral tidak akan mengubah BI rate apabila tidak ada situasi yang benar-benar memaksa untuk dilakukan penyesuaian suku bunga.

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

For information, the benchmark interest rate as of January 2022 is 5.75 percent. This figure is already higher than the core and IHK inflation, which amounted to 3.36 percent and 5.51 percent year on year (yoy) in December 2022, respectively.

Even so in terms of economic growth. The BI rate is already above Indonesia's GDP rate with a final record of 5.72 percent in the third quarter of 2022.

Just so you know, in the early period of the pandemic until the end of 2022, the benchmark interest rate of Bank Indonesia is always below economic growth. This is intended as a supporting force for the economy due to the impact caused by COVID-19.

In fact, BI had imposed an interest rate of 3.50 percent which became the lowest figure in the history of Indonesia's central bank.