CORE Researcher: BI Will Not Cut Interest Rates In The Near Future

Economic researcher at the Center of Reform on Economics (CORE) Indonesia Yusuf R Manilet. (Photo: Doc. Antara)

JAKARTA - Economic researcher at the Center of Reform on Economics (CORE) Indonesia Yusuf R Manilet said Bank Indonesia (BI) will not cut policy interest rates or BI-Rate in the near future.

This is because inflation still has the potential to increase in the month of Ramadan and ahead of Eid al-Fitr 2024.

Currently BI-Rate is still at the level of 6 percent. The market is waiting for BI's decision regarding the policy direction of its benchmark interest rate at the BI Board of Governors Meeting on 19-20 March 2024. In February 2024, inflation was generally recorded at 2.75 percent on an annual basis, and this figure is relatively higher than the inflation rate in January 2024 which reached 2.57 percent. On the other hand, Yusuf said that the price of food demand in Ramadan had not shown any signs of experiencing a decline for several commodities such as rice and sugar. Meanwhile, in terms of the rupiah exchange rate throughout February 2024, there was also a weakening of the rupiah exchange rate against the US dollar.

Previously, Bank Indonesia through RDG BI on February 20-21, 2024, determined to hold the benchmark interest rate or BI-Rate fixed at 6 percent. The deposit facility interest rate also remains at 5.25 percent, and the lending facility interest rate is maintained at the level of 6.75 percent. This decision supports pre-emptive and forward looking steps to ensure inflation remains under control in the target of 2.5 plus minus one percent by 2024.