BI: Tight Money Policy to Depend on Inflation

TEMPO.CO, Jakarta - Executive Director of Economic Research and Monetary Policy Department of Bank Indonesia (BI), Dodi Budi Waluyo, said that Bank Indonesia will have to review the possibility of continuing the tight money policy this year. He said that BI keeps watching the developments, including the inflation risks in the future, food issues, and the increase of base electricity rates.

"We are also watching the current account. Based on the developments, then we can judge what to do with the interest rate. Whether it is going to be raised, dropped, or fixed, we shall see the development from time to time," said Dody after attending Indonesia Investor Forum 3, at Jakarta Convention Center, on Tuesday, January 21, 2014.

He said that those will be taken into account because there are still some risks. The possibility of global impact, such as Fed Rate increase in the future will also be considered. Dody said that if the Fed Rate was increased, then the developing country, such as Indonesia would be affected.

He also said that Bank Indonesia needs to watch data from time to time to decide the tight money policy continuation. He said that up until Board of Governor's Meeting on January 9, 201, Bank Indonesia still sees the need to maintain the interest rate. However, Dody said that the inflation would drop in 2014, as well as the current account. He also explained that Bank Indonesia is expecting the rupiah exchange against US dollars will be stable in 2014.

MAYA NAWANGWULAN