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View all search resultsBI holds rate steady amid rupiah volatility bouts
The central bank governor Perry Warjiyo said that global uncertainty increased risk premiums and created “short-term pressures toward the exchange rate”.
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Metallic plating reading 'Bank Indonesia' is displayed on July 17, 2024, on one of the buildings in the central bank headquarter complex. (JP/Deni Ghifari)
B
ank Indonesia (BI) has decided for the fifth month in a row to maintain its benchmark interest rate despite low inflation in order to stabilize the rupiah exchange rate that has been going through volatility bouts for the past month.
Following the central bank’s two-day monthly policy meeting, BI Governor Perry Warjiyo announced in a press conference on Thursday that the BI Rate would remain where it has been since last September at 4.75 percent.
“We are still consistent, our view is still that the room for interest rate reduction remains open given the low inflation and economic growth that needs to be pushed,” said Perry.
“However, under current global conditions that still possess high uncertainty, we, of course, will be data-dependent. We will keep a close eye on future opportunities to realize interest rate cuts,” he added.
Inflation has been kept in check within the central bank’s target range of 2.5 plus minus 1 percent for more than two years until it struck the ceiling in January when the consumer price index growth touched 3.55 percent year-on-year (yoy).
BI projected the inflation to stay elevated up until March but attributed the rise to base effect resulting from last year’s 50 percent electricity discount in January and February of 2025, which brought down CPI growth to under 1 percent yoy during the discount period.
The monetary authority forecast inflation to be below 3 percent for this year, comfortably within the target as has been the case since mid-2023.
