The Bank Indonesia Board of Governors meeting on 23-24 August 2023 decided to again maintain the BI 7-Day Reverse Repo Rate (BI7DRR) at 5.75 percent, while the deposit facility rate was 5.00 percent, and the lending facility rate was 6. 50 percent.
“The decision to maintain the BI7DRR at 5.75 percent is consistent with the monetary policy stance to ensure that inflation remains under control within the target range of 3.0 ± 1 percent in the remainder of 2023 and 2.5 ± 1 percent in 2024,” BI Governor Perry Warjiyo said in a statement. press conference in Jakarta, Thursday (24/8).
Perry explained, the focus of the monetary policy this time was directed at stabilizing the rupiah exchange rate and mitigating the spillover impact of the uncertainty that still enveloped global financial markets.
In addition, said Perry, to support national economic growth, loose macroprudential policies continue to be directed at strengthening the effectiveness of providing liquidity incentives to banks to encourage credit/financing with a focus on downstream, housing, tourism and inclusive and green financing. The acceleration of digitalization of the payment system will also continue to be encouraged to expand digital economic and financial inclusion, he said.
Governor of Bank Indonesia (BI) Perry Warjiyo (center). Photo: BI
On this occasion, Perry said BI would continue to strengthen its policy mix response to maintain stability and encourage growth, one of which was by issuing Bank Indonesia Rupiah Securities (SRBI).
Perry explained that SRBI is a pro-market OM (contraction) instrument in order to strengthen money market deepening, and as an effort to attract foreign capital in the form of portfolio investment, as well as to optimize SBN assets (State Valuable Certificates) owned by Bank Indonesia.
According to him, this policy will begin to be implemented on September 15, 2023.
Furthermore, Perry said that even though global uncertainty has increased again, triggered by the economic slowdown in China and European countries, as well as high inflationary pressure in developed countries, the country’s economy this year is expected to remain stable in the range of 4.5 percent-5. .3 percent. According to him, the domestic economy which is still strong will be able to minimize the impact of the global propagation.
“The source of our economic growth is domestic. Household consumption is high, and this is mainly in the service sector, the tertiary sector, trade, transportation, warehousing, accommodation, food, beverages and this shows that the source of household consumption is millennials, who make up 70 percent of our population, and their income is increasing. tall. This is the driving force for domestic economic growth. And this also supports, encourages, investment growth, especially non-building ones,” he explained.
Very Careful Government
Indef economist Eka Puspitawati sees BI’s decision to hold the benchmark interest rate for seven consecutive months as a form of caution to minimize the global impact that still threatens Indonesia.
“I see it seems that the Central Bank is being careful to contain the rate of inflation, including through the BI Rate. It looks like it’s still wait and see,” said Eka.
By maintaining the reference interest rate, said Eka, the country’s economic growth would tend not to change much and could even be said to be stagnant.
According to him, after holding on for quite a while, now is the right time for BI to be able to lower the benchmark interest rate. That way, he said the economy from the real sector will be more enthusiastic.
“I think this is actually BI’s momentum to be able to boost the economy higher, where I see the political year has not been hot. Next year it will start to get hot, and if it’s already hot, it means you really have to be on guard to be more stable. If you want to improve (the economy) this is the time. i saw that. So it has to go down a bit so that it can push the real sector to stretch. So people invest a lot, people will start doing a lot of activities in the real sector with more friendly interest rates. Because if we look at it now it is still quite high,” he concluded. (gi/ab)