BI's Surprise Rate Hike Meets Prabowo’s Pro Growth Stance

By Editorial Team 25/04/2024
Interest Rates
Summary

The Bank Indonesia (BI) Board of Governors meeting has raised the BI 7-Day Reverse Repo Rate (BI-7DRR) by 25 basis points to 6.25 percent, the Deposit Facility rate to 5.5 percent, and the Lending Facility rate to seven percent. BI Governor Perry Warjiyo stated that the decision is a response to increased global uncertainty stemming from changes in the direction of the Fed Fund Rate and escalating political tensions in the Middle East.

Initially, the Fed was expected to lower the Federal Fund rate in the second half of 2024. However, many predict that the Fed will hold its interest rates lower for longer amid continuing inflationary pressures. "This situation requires a strong policy response to mitigate the negative impact of the spread of global uncertainty on economies in developing countries, including Indonesia," Perry said on Wednesday, Apr. 24.

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