“The decision to raise the interest rate is an extension of BI’s preemptive and frontloading policy to maintain the competitiveness of the domestic financial market against changes in monetary policy in several countries and uncertainty in the global financial market,” Perry said in Jakarta on Friday.

Following a two-day board of governors meeting, the central bank hiked its reference rate by 50 bps to 5.25 percent, while the lending facility and deposit facility rate was also increased by 50 bps to 6 and 4.5 percent respectively.

It was the third rate hike this year, with the central bank hiking the rate by 100 bps since May in a move to stabilize the rupiah.

Perry added BI’s stance tilted toward tightening its monetary policy after the latest rate hike while hinting there was room going forward to strengthen the policy mix in response to the latest developments in the global and domestic economy.

The central bank has also announced macroprudential policy relaxation in housing, which includes loan-to-value relaxation for property loans and financing-to-value for property financing, requirement relaxations in the housing indent and adjusting loan disbursement regulations.

Macroprudential relaxation in housing will be in effect from Aug. 1. (bbn)

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