Bank Indonesia Responds To Rising Inflation, Interest Rates Rise Pak Perry?

Governor of Bank Indonesia Perry Warjiyo (Photo: Doc. Antara)

JAKARTA - Bank Indonesia (BI) responded to the increase in core inflation in April 2022 to 0.36 percent month to month (mtm) which was higher than March 2022 which was 0.30 percent (mtm).

"Based on the commodity, core inflation in April 2022 was mainly contributed by the commodities of oily cookies and cars in line with the increase in cooking oil prices and increasing public mobility," said Head of the BI Communications Department Erwin Haryono in an official statement quoted Tuesday, May 10.

According to Erwin, annual core inflation in April 2022 reached 2.60 percent (year on year/yoy), or an increase compared to the previous month's period of 2.37 percent yoy.

"Core inflation was maintained amid increasing domestic demand, supported by maintained exchange rate stability, and the consistency of Bank Indonesia's policies in directing inflation expectations," he said.

As for inflation in general or based on the Consumer Price Index (CPI), in April 2022 the inflation level was known to be 3.47 percent yoy. This score is higher than inflation in the previous month with 2.64 percent yoy.

For information, Bank Indonesia uses inflation instruments, particularly core inflation, as a guide for setting the benchmark interest rate. Currently, BI's benchmark interest rate is still pegged at the lowest level in history at 3.50 percent.

BI Governor Perry Warjiyo some time ago mentioned the possibility of the central bank renewing its interest rate policy if there are signs of an increase in core inflation.

“We will continue to pay attention to inflation developments, especially core inflation. If the core inflation goes up, the interest rate will adjust," Perry said on Friday, December 24, 2021.

Bank Indonesia itself plans to set the latest interest rate policy after the Board of Governors' Meeting (RDG) in the middle of this month. In addition to the BI rate, the results of the RDG decisions usually describe various monetary strategies taken by the central bank to support the national economy.