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BI keeps interest rate unchanged to stabilize rupiah
The central bank has decided to maintain the BI-Rate at 6 percent in anticipation of the potential adverse impacts on Indonesia's economy and currency from the policies of the incoming administration of US president-elect Donald Trump.
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Bank Indonesia Governor Perry Warjiyo speaks on Nov. 30, 2022, during the central bank’s annual shareholders meeting in Jakarta. (Reuters/Willy Kurniawan)
B
ank Indonesia (BI) has kept its benchmark interest rate unchanged, stressing its priority is to stabilize the rupiah amid a strengthening United States dollar following Donald Trump’s reelection and heightened geopolitical risks.
In a press briefing issued on Wednesday after the central bank’s monthly policy meeting in Jakarta, BI Governor Perry Warjiyo said the BI-Rate had been maintained at its current level of 6 percent.
The decision is in line with a projection from Moody’s Analytics.
“Going forward, BI will continue to monitor the movement of the rupiah, the inflation outlook and data developments as well as the dynamics of developing conditions to assess the room for further policy rate cuts,” Perry said.
The rupiah had been on an upward trend after hitting a low in late June to reach this year’s highest level at around Rp 15,100 per dollar in late September, but has fallen back since and was trading near Rp 15,915 on Wednesday, just below the psychological threshold of Rp 16,000.
Perry explained that the incoming US administration under Trump was projected to adopt more inward-looking policies, including tariff hikes targeting trading partners in China and Europe, which were expected to weigh on economic growth in those countries next year.
On the other hand, Trump was likely to introduce tax incentives for domestic industries, he said, which could slow the decline in the US inflation rate and prompt the Federal Reserve to be more cautious about easing its monetary policy further.
