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BI holds rate at 3.5% with eye on Ukraine crisis
The decision comes after the US Fed raised its benchmark rate for the first time since 2018.
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Bank Indonesia Governor Perry Warjiyo talks during a virtual press conference held after the central bank's two-day policy meeting on Jan. 21, 2021. (Courtesy of Bank Indonesia/-)
B
ank Indonesia (BI) decided on Thursday to hold its benchmark seven-day reverse repo rate (7DRRR) at 3.5 percent to support Indonesia’s economic recovery.
Following a two-day meeting, BI Governor Perry Warjiyo said the central bank would also keep its deposit facility and lending facility rates unchanged at 2.75 and 4.25 percent, respectively.
“This decision is in line with the need to maintain exchange rate stability and the stability of inflation, and efforts to continue economic recovery amid external pressures that mainly arise from the Russia-Ukraine geopolitical tensions,” he said.
The central bank has held the 7DRRR at the record low rate since February 2021.
BI’s decision comes shortly after the United States Federal Reserve raised its benchmark rate on Wednesday for the first since 2018 to combat inflation, which hit a 40-year high of 7.9 percent in February.
Read also: US Fed hikes interest rates
Global inflation has been rising this year as the world emerges from the COVID-19 pandemic but inflation has been exacerbated by the Ukraine-Russia war. The high inflation has pressured many central banks into raising rates.
