Considering Internal and External Factors, BI Maintains Interest Rate

The Bank Indonesia Board of Governors (RDG) meeting on November 15-16, 2017, decided to maintain the BI 7-day Reserve Repo Rate at 4.25 percent. Similarly, the Deposit Facility rate remains at 3.5 percent and the Lending Facility rate at 5.00 percent. This is the second time the central bank has held the benchmark interest rate following a 25 basis point cut.

Bank Indonesia Governor Agus DW. Martowardojo explained that the decision considered both external and internal factors. Globally, the decision anticipates monetary tightening in developed countries and geopolitical factors. Internally, the decision takes into account the still-weak consumer spending and suboptimal banking intermediation.

Bank Indonesia will continue to coordinate with the government to strengthen policy mixes in order to maintain macroeconomic stability, financial system stability, and to promote stronger structural reforms to bolster economic fundamentals. For information, in the third quarter of 2017, the domestic economy grew by only 5.06 percent year-on-year (YoY). Cumulatively, for the first three quarters of 2017, Indonesian economic growth was only 5.03 percent YoY. This achievement is below the 2017 Revised State Budget (APBN-P) target of 5.2 percent.