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Bank Indonesia holds benchmark rate at 3.5%
Bank Indonesia has kept its key interest rate unchanged as it anticipates a hike in the US Federal Reserve’s rate.
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The Bank Indonesia logo is displayed on a gate in Jakarta on Feb. 4, 2011. (AFP/Romeo Gacad)
B
ank Indonesia (BI) has kept its benchmark interest rate at 3.5 percent in what it sees as the best way to maintain financial sector stability and support the economic recovery ahead of a widely expected rate hike by the United States’ Federal Reserve.
The deposit facility and lending facility rates will also remain unchanged at 2.75 percent and 4.25 percent, respectively.
“This decision is in line with the need to maintain stability on inflation, the exchange rate and the financial system, as well as continuing to support the national economic recovery,” BI Governor Perry Warjiyo told reporters during a virtual broadcast on Thursday.
Read also: BI to stay dovish until late 2022, but no more rate cuts
Perry said the central bank would direct its monetary policy in 2022 to maintain stability in the domestic economy while mitigating the effects of monetary policy normalization in developed countries, particularly the impending federal funds rate hike in the US.
BI’s policy considerations are based on a baseline scenario of four rate hikes in the US this year, starting in March.
“The probability of a rate hike [by the Fed] in March is high,” Perry said.
