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BI keeps rate unchanged despite expecting inflation of 4.2%
Indonesia’s central bank will not increase its benchmark seven-day reverse repo rate (7DRRR) nor its lending or deposit facility rates, even though it anticipates full-year inflation slightly above its target range.
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Bank Indonesia (BI) 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/-)
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ank Indonesia (BI) will keep its benchmark seven-day reverse repo rate (7DRRR) at 3.5 percent, even though it expects full-year inflation to rise to 4.2 percent.
Following its monthly two-day monetary policy meeting, the central bank also decided to keep the lending and deposit facility rates at 4.25 and 2.75 percent, respectively.
“This decision is in line with the need to control inflation and maintain exchange rate stability as well as continue to support economic growth amid rising external pressures related to the increasing risk of stagflation in various countries,” BI Governor Perry Warjiyo told reporters during a virtual press briefing on Tuesday.
Read also: Inflation rises to nearly five-year high
He continued that the central bank would continue to monitor current inflation data, more importantly core inflation, and was open to implementing steps to “normalize” monetary policy, if it were required.
Statistics Indonesia (BPS) reported earlier this month that inflation rose to 3.55 percent year-on-year (yoy) in May, the highest rate since December 2017, mainly due to the price increase in the category of food, beverages and tobacco.
