JAKARTA - Economist and Director of the Center of Economic and Law Studies (Celios) Bhima Yudhistira said the government needed to mitigate the impact of the increase in interest rates announced by Bank Indonesia (BI) on Thursday, January 19 yesterday.
Bhima assessed that there would be bad impacts, one of which hindered the recovery of the national economy.
"This (increase in interest rates) effect could disrupt economic recovery, because it turns out that the increase in interest rates is quite aggressive, on the one hand inflation is still high, especially inflation from the impact of fuel and food inflation," Bhima told VOI, Friday, January 20.
Therefore, Bhima emphasized that the government and Bank Indonesia must immediately prepare a number of strategies to mitigate the impact of the increase in interest rates. This is because, according to Bhima, interest rate increases are still likely to occur three to four times in 2023.
He emphasized that there must be a mitigation policy to continue to encourage purchasing power or stimulate sectors that will be directly affected.
"For example, in the industrial sector where debt burdens are quite high or in the property sector, motorized vehicles, household equipment, retail. Those are sectors that must be given stimulus as soon as possible," explained Bhima.
With the right mitigation, Bhima hopes that at least the government can compensate for the effects of rising interest rates. If this is not done, Bhima regrets an increase in interest rates, considering that Indonesia is currently in the momentum of economic recovery and mobility.
"This, right, the momentum is economic recovery, mobility recovery. Do not let the increase in interest rates become a scourge, so the economy will slow down a bit," he said.
For your information, the Board of Governors' Meeting (RDG) of Bank Indonesia (BI) decided to raise the BI 7-Day Reverse Repo Rate (BI7DRR) by 25 basis points to 5.75 percent for the January 2023 period.
With this increase, the deposit facility interest rate becomes five percent and the lending facility rate becomes 6.5 percent.
"The Board of Governors meeting decided to raise the BI 7-day reverse repo rate by 25 basis points," said Bank Indonesia Governor Perry Warjiyo in a virtual press conference, Thursday, January 19.
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