Interest Rate or Rupiah, Which One Will BI Choose?

Summary

Bank Indonesia (BI) may keep its benchmark interest rate unchanged in the near future as the central bank is still focused on boosting the economy. The signal to hold interest rates emerged at the BI Board of Governors' Meeting (RDG) on June 22-23.

"Monetary policy will continue to be pro-stability. With low inflation, we don't need to rush to raise interest rates," BI Governor Perry Warjiyo said at a World Bank event on Wednesday. BI's consideration is based on the inflation rate, which is still under control.

Currently, inflation is still at 3.5 percent, and BI estimates that by the end of the year, inflation will reach 4.2 percent. Perry added that BI's monetary policy would be directed to support economic stability, while macro-prudential policies will support economic growth.

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