To maintain rupiah stability, BI holds benchmark interest rate at 3.5%

Bank Indonesia (BI) has decided to maintain its benchmark interest rate (BI 7 Day Reverse Repo Rate/BI7DRR) at 3.5%. In line with this, BI is also maintaining the Deposit Facility rate at 2.75% and the Lending Facility rate at 4.25%.

This decision was taken to maintain the stability of the rupiah exchange rate and the financial system amid global financial uncertainty and low inflation projections. Furthermore, this effort is expected to stimulate economic growth during the Covid-19 pandemic.

BI predicts that national economic growth will fall to 3.5-4.3% from the previous projection of 4.1-5.1% in 2021. Economic growth is expected to be lower in the third quarter of 2021 due to the massive spread of the Delta variant of Covid-19.

Subsequently, the government implemented Community Activity Restrictions (PPKM), weakening consumer purchasing power. As a result, there has been a decline in household consumption indicators, which are the engine of the Indonesian economy.

Nevertheless, economic growth is predicted to rebound in the fourth quarter of 2021 due to increased mobility, accelerated vaccination, and the implementation of health protocols.