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BI hikes rate by only 25 bps, first dovish move since August
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Bank Indonesia Governor Perry Warjiyo (Antara/Puspa Perwitasari)
B
ank Indonesia (BI) has again raised its interest rates, albeit by its lowest increment since it started the series of hikes in August, as policymakers forecast an easing in external pressure in 2023.
The central bank’s board of governors decided on Thursday to increase the seven-day reverse repo rate (7DRRR) by 25 basis points (bps) to 5.5 percent, lower than the 50 bps hikes in the previous months.
Similar to the benchmark rate, the lending and deposit facility rates were also upped by 50 bps to 6.25 and 4.75 percent, respectively.
BI’s policy was in line with estimates made by state-owned lender Bank Mandiri and financial research firm Moody’s Analytics.
Read also: Economy headed into uncharted waters in 2023
“The decision for a more measured interest rate hike is a continuation of the front-loaded, pre-emptive and forward looking policy to ensure a further reduction in inflation expectations and inflation,” BI Governor Perry Warjiyo told reporters after the central bank’s monthly two-day monetary policy meeting ended.
Statistics Indonesia (BPS) data show that the rise in the consumer price index (CPI) slowed to 5.42 percent year-on-year (yoy) in November, continuing the slowing trend since peaking in September at 5.95 percent yoy.
