TEMPO.CO, Jakarta - State-owned Bank Mandiri (IDX: BMRI) reacted well to Bank Indonesia's (BI) decision to raise its benchmark interest rate. In its board meeting today, the central bank decided to raise the benchmark interest rate to 6.25 percent in a bid to boost the rupiah's stability.

"We believe that maintaining financial stability is very important for the financial sector, especially the banking sector, and the macroeconomy," Bank Mandiri's corporate secretary Teuku Ali Usman said in a written statement on Wednesday, April 24.

He said that the rate hike will allow the banking sector to implement better and more prudent strategies amidst various global uncertainties and fluctuations.

According to Bank Mandiri, the policy of raising the BI 7-day Reverse Repo Rate (BI7DRR) is a pre-emptive and anticipatory measure by the central bank. The aim is to ensure that the economy and financial markets remain stable amid escalating global risks.

"These include the geopolitical conflict in the Middle East and the potential for a possible delay in the reduction of the US interest rate or Fed Funds Rate (FFR)," Teuku said.

The BI's Board of Governors meeting on April 23-24 decided to raise the BI rate by 25 basis points to 6.25 percent. The central bank raised the deposit facility rate to 5.50 percent. Meanwhile, the lending facility rate was raised by 7 percent.

BI Governor Perry Warjiyo said the increase was aimed at strengthening the stability of the rupiah exchange rate against the possibility of worsening global risks. It is also a preemptive and forward-looking measure to ensure that inflation remains within the target range of 2.5 percent, ±1, for this year and 2025, which is in line with the pro-stability monetary policy.

In terms of macroprudential policies and payment systems, Perry said the BI remains pro-growth to support sustainable economic growth. Perry said the central bank continues to pursue macroprudential policies to encourage banks to lend and finance both businesses and households.

RIANI SANUSI PUTRI | ANNISA FEBIOLA

Editor's Choice: Bank Indonesia Raises Key Interest Rate to 6.25% to Bolster Rupiah Stability

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