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View all search resultsBI stays put on interest rate amid wobbly global economy
The BI rate would remain at 5.50 percent, where it has stood since a 25-basis-point (bps) cut last month.
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Bank Indonesia (BI) Governor Perry Warjiyo talks during a livestreamed press briefing after the monthly Board of Governors meeting in June. (Courtesy of Bank Indonesia (BI)/-)
B
ank Indonesia (BI) has decided to hold its key interest rate while maintaining a cautious stance amid global economic uncertainty. The central bank highlighted ongoing tariff negotiations between several countries and the United States, along with escalating geopolitical tensions in the Middle East, as key risks weigh on the outlook.
Following its two-day monthly policy meeting, BI Governor Perry Warjiyo announced at a press conference in Jakarta on Wednesday that the benchmark interest rate would remain at 5.50 percent.
After reaching the peak of its recent monetary tightening cycle at 6.25 percent in April last year, BI has trimmed its rate by 25 basis points three times, first in September, then again in January and May this year.
“Global economic uncertainty has been heightened by America’s reciprocal tariff policy,” Perry said.
According to Perry, the central bank is maintaining its projection for global economic growth at 3 percent. He also pointed out that rising goods inflation in the US, driven by tariffs, could further strengthen the case for the Fed to cut rates again this year.
Meanwhile, BI has kept its economic growth forecast for Indonesia this year at between 4.6 and 5.4 percent, anticipating stronger economic activity in the second half of the year.
Perry noted that non-oil and gas exports have shown signs of improvement in the second quarter, as exporters try to front-load shipments to the US amid delayed tariff hikes. However, he acknowledged that growth in household consumption and investment “needs to be improved.”
