Bank Indonesia Keeps Benchmark Rate at 3.5%

TEMPO.CO, Jakarta - Bank Indonesia's (BI) Board of Governors Meeting on June 22-23 resulted in a decision to keep the 7-Day Reverse Repo Rate (BI7DRR) at 3.50 percent. The central bank also kept the Deposit Facility rate at 2.75 percent and the Lending Facility rate at 4.25 percent.

"This decision is in line with the need to control inflation and maintain exchange rate stability," BI governor Perry Warjiyo said in a written statement on Thursday, June 23.

Perry said the decision was also made to support economic growth amid external pressures from the increasing risk of stagflation in various countries. In the future, he said, global economic uncertainties are expected to remain high along with risks of slowing growth and rising inflation.

"Including the result of more widespread protectionism policies, especially on food, which had been taken by various countries," he said.

The central bank, Perry said, will continue to monitor the risk of future inflationary pressures, including inflation expectations and the impact on core inflation. BI will take further steps to normalize monetary policies in accordance with developments in data and situations.

BI will also coordinate with the government and agencies through the Inflation Control Team (TPIP and TPID) that will be strengthened to manage inflationary pressure from the supply side, and boost production. This is to maintain the stability of the country's macroeconomics and support economic recovery, as well as improve monetary and fiscal policy coordination.

Muhammad Hendartyo

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