BI Maintains Benchmark Interest Rate at 7.5 Percent

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  • TEMPO.CO, Jakarta - Bank Indonesia has decided to maintain the benchmark interest rate of 7.5 percent in the board of governors’ meeting on Thursday, September 11, 2014. The meeting has also decided that the interest rate for lending facilities and deposit facilities to remain at 7.50 percent and 5.75 percent, respectively. 

    Bank Indonesia’s communications department executive director Tirta Segara said the policy was consistent with the efforts to maintain the inflation rate set at 4.5 percent, plus minus one percent in 2014; and 4 percent, plus minus one percent in 2015. 

    “In addition, [the policy] is aimed at reducing the current account deficit,” Tira told a press conference on Thursday, September 11, 2014. 

    However, Tirta said, there were several risks to anticipate posed by external and domestic factors, which would potentially hamper the achievement of the inflation target and the improvement of the current account performance. 

    David Sumual, an economist at Bank Central Asia, said BI’s policy to maintain its benchmark interenst rate was supported by realistic inflation target. In addition, the current account deficit has forced BI to continue its tight monetary policy until the end of this year. 

    The last time BI increased its benchmark interest rate was in November 2013, from 7.25 percent to 7.5 percent.