BI Holds BI-Rate At 6.25%, Maintains Tight Monetary Stance

Jakarta - Bank Indonesia (BI) has maintained its benchmark interest rate, the BI-Rate, at 6.25% for the fourth consecutive meeting. The decision, announced following the June 2024 Board of Governors Meeting, reflects a continued focus on stabilizing the Rupiah and preemptively mitigating inflationary pressures. The Deposit Facility and Lending Facility rates also remain unchanged at 5.50% and 7.00%, respectively.

This policy stance is a direct response to persistent global financial market uncertainty, primarily driven by the shifting timeline for the United States Federal Reserve's monetary policy adjustments. BI Governor Perry Warjiyo emphasized that maintaining the current interest rate level is crucial to preserving the attractiveness of domestic financial assets and ensuring the Rupiah remains a stable store of value.

The Rupiah's performance has been under pressure, trading above Rp 16,000 per US dollar. BI views the current rate as a preemptive and forward-looking measure to anchor inflation expectations and prevent imported inflation from eroding purchasing power. The central bank is committed to intervening in the foreign exchange market to smooth volatility.

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Core inflation in Indonesia remains under control within the target corridor of 2.5% ± 1%. However, risks loom from administered price adjustments and volatile food prices due to climatic factors. The tight monetary policy is designed to ensure that core inflation stays firmly anchored, even as potential cost-push pressures emerge.

Beyond interest rates, BI is intensifying its synergy with the government to stabilize food prices and maintain the momentum of domestic economic growth. This includes optimizing payment system policies and encouraging the use of local currency in international transactions to reduce dependence on the US dollar.

Governor Warjiyo reiterated that the current monetary policy stance is consistent with the core mandate of achieving and maintaining Rupiah stability. Stability is seen as the essential foundation for sustainable economic growth, providing certainty for investment and long-term planning in the real sector.

Looking ahead, BI asserts that all policy instruments will remain focused on stabilizing the Rupiah. The central bank will monitor global risks, including the dynamics of the US economy, geopolitical tensions, and commodity price movements, to determine its future policy steps.

The decision underscores BI's commitment to its pro-stability paradigm, prioritizing the defense of the currency and macroeconomic stability over immediate growth stimulation, amid a complex and uncertain global landscape.

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Bank Indonesia BI-Rate Exchange Rate Fed Global Uncertainty Inflation Interest Rate Monetary Policy Rupiah Stability