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BI keeps rates unchanged, sees only one Fed cut this year
Bank Indonesia (BI) has kept its key interest rate unchanged and expects just one cut in the US Federal Reserve’s (Fed) benchmark rate this year.
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Bank Indonesia (BI) Governor Perry Warjiyo gestures to reporters on Jan. 15, 2025, during a press conference at BI headquarters in Jakarta. (Reuters/Willy Kurniawan)
B
ank Indonesia (BI) has kept its key interest rate unchanged and expects just one cut in the United States Federal Reserve’s (Fed) benchmark rate this year.
Following the central bank’s monthly policy meeting in Jakarta on Wednesday, BI Governor Perry Warjiyo announced in a press conference that its key interest rate remained at 5.75 percent, a decision he said was “consistent with the endeavor to maintain inflation.”
He said further reduction in the BI-Rate was still in sight, but the timing would depend on “global dynamics” and the projected impact on Indonesian exports and thereby on gross domestic product growth.
Higher interest rates generally slow down economic activity by increasing borrowing costs and thereby reducing investment and consumer spending.
“Going forward, Bank Indonesia will pay attention to the development of inflation in determining a BI-Rate reduction, with the rupiah’s exchange rate stability in mind,” Perry explained.
The BI governor added that no country could get its “economy rolling” without stability, including currency stability, especially in the face of “continuous global turbulence”.
One source of turbulence was the hike of import tariffs in the US that came “faster and broader than initially estimated”, Perry said.
