Positive Economic Outlook Prompts BI to Hold Interest Rate at 6% in November 2023

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Adi Ahdiat 29/11/2023 15:40 WIB

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Bank Indonesia held its benchmark 7-Day Reverse Repo Rate (BI7DRR) steady at 6% in November 2023, influenced in part by a positive projection for domestic economic growth.

Movement of the BI 7-Day Reverse Repo Rate (November 2019 - November 2023)

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Movement of the BI 7-Day Reverse Repo Rate (November 2019 - November 2023)

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Bank Indonesia (BI) held its benchmark interest rate, the BI 7-Day Reverse Repo Rate (BI7DRR), steady at 6% in November 2023.

This interest rate level is the highest in the last four years, as shown in the graph above.

BI set the benchmark interest rate at 6% considering various factors, one of which is the projection of Indonesia's robust economic growth.

"Economic growth is projected to remain strong in the fourth quarter of 2023, reflected in several early indicators such as consumer confidence, income expectations, and the Manufacturing Purchasing Managers' Index," said Erwin Haryono, Head of BI's Communication Department, in a press release on Thursday (23/11/2023).

"Economic growth in 2024 is projected to increase, driven by sustained strong consumer confidence, the positive impact of the general election, and the continuation of National Strategic Projects," he added.

Despite the bright outlook for the domestic economy, BI predicts that global economic growth will slow from 2.9% in 2023 to 2.8% in 2024.

This projected global slowdown is partly influenced by persistently high inflation.

"Inflation in developed countries remains above target, although pressure is starting to ease. Given these inflationary developments, monetary policy interest rates, including the Federal Funds Rate (FFR), are expected to remain high for an extended period," said Erwin.

"Uncertainty in financial markets persists and affects the volatility of capital flows and exchange rate pressures in emerging markets," he added.

Editor : Adi Ahdiat

"Disclosure: This is an AI-generated translation of the original article. We strive for accuracy, but please note that automated translations may contain errors or slight inconsistencies."