Bank Indonesia (BI) has just presented its policy direction views this year. According to Bank Indonesia Governor, Perry Warjiyo, the overall policy direction will still be the same as in 2022.
Bank Indonesia (BI) ensures that it will remain pro-stability and pro-growth. According to Perry, monetary policy will be aimed at maintaining pro-stability this year.
“Last year, as well as now this year, our monetary instruments are pro-stability. Consistent, pro-stability,” Perry said in the 2022 Bank Indonesia Transparency and Accountability Report (LTABI), Monday (30/1/2023).
Meanwhile, macroprudential, payment systems, and money market as well as economic inclusion are pro-growth. He detailed that monetary policy would be directed at reducing inflation and maintaining the stability of the rupiah exchange rate.
To reduce core inflation, BI has raised interest rates by 225 basis points (bps). According to Perry, this figure is very adequate. The forward guidance is also no word more transparent.
Furthermore, BI sees the exchange rate will strengthen this year. Perry ensures that this mandate will continue to be carried out properly. He will also continue to strive to stabilize the Rupiah exchange rate by optimizing the management of foreign exchange flows
From a macroprudential perspective, he ensured that he would continue to support growth. BI will continue to push for a zero percent down payment relaxation for houses and motorized vehicles.
Then, the central bank will also ensure that there is excess liquidity in the country, even though interest rates have increased.
“The theoretical monetary principles are just like that. But now we have a policy mix. Monetary is pro-stability, macroprudential is pro-growth,” said Perry.
Bank Indonesia Raised Its Reference Rate
As previously reported, BI finally decided to raise the reference rate or BI 7-Day Reverse Repo Rate (BI7DRR) again by 25 bps to 5.75 percent. This decision was taken at the Bank Indonesia Board of Governors’ Meeting (RDG) on 18-19 January 2023.
Governor of BI Perry Warjiyo, in a virtual press conference, Thursday (19/1/2023), said, “The meeting of the BI board of governors on 18-19 January 2023 decided to increase the reference rate or BI 7-day reverse repo rate by 25 bps to 5.75%.”
Perry said the Deposit Facility rate was 25 bps to 5 percent, and the Lending Facility rate was 25 bps to 6.5 percent.
According to him, the decision to raise interest rates more measurably is a follow-up step to be front-loaded, pre-emptive, and forward-looking.
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