Legitimate! Bank Indonesia Finally Keeps The Reference Interest Rate Fixed At 3.50 Percent

Illustrations (Photo: Doc. VOI)

JAKARTA - Bank Indonesia (BI) finally chose to keep the benchmark BI 7-Day Reverse Repo Rate (BI7DRR) at 3.50 percent.

This decision was conveyed directly by BI Governor Perry Warjiyo as a result of the Board of Governors' Meeting (RDB) which was held in the past two days.

"Bank Indonesia has also decided to keep the deposit facility interest rate at 2.75 percent and the lending facility interest rate at 4.25 percent," he said via a virtual channel on Thursday, March 17.

According to Perry, this policy was taken on the basis of the need to maintain the stability of the rupiah exchange rate and keep domestic inflation under control.

"This is also an effort to continue to encourage national economic growth in the midst of increasing external pressure, especially related to geopolitical tensions between Russia and Ukraine," he said.

Through this decree, the monetary authority officially extended the trend of the lowest interest rate in Indonesia's history to 3.50 percent.

In VOI records, this level has been maintained by the central bank since 2020 with a gradual cut of 150 basis points in six declines.

By not moving the BI rate, the opportunity for banks to continue credit expansion will be easier.

In addition, this benchmark interest rate will certainly encourage business actors to withdraw credit without having to worry about an increase in higher interest rates. Thus, the pace of national economic recovery can continue without being hampered by the latest monetary policy.