Bank Indonesia Holds Reference Interest Rate at 6% in December 2023

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Cindy Mutia Annur 21/12/2023 16:50 WIB

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Bank Indonesia (BI) held its benchmark interest rate, the BI Rate, steady at 6% in December 2023.

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

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Bank Indonesia Holds Reference Interest Rate at 6% in December 2023

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

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Bank Indonesia (BI) held its benchmark interest rate, the BI-Rate, steady at 6% in December 2023.

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

The central bank also kept the deposit facility rate unchanged at 5.25% and the lending facility rate at 6.75%.

According to BI, this decision is consistent with its monetary policy to stabilize the rupiah exchange rate and ensure inflation remains within the target of 2.5±1% in 2024.

BI stated that its macroprudential and payment system policies remain pro-growth to support sustainable economic growth.

A loose macroprudential policy continues to be implemented to encourage bank lending to businesses and households.

BI projects Indonesia's economy to grow between 4.5% and 5.3% in 2023, then rising to 4.7% to 5.5% in 2024.

This projection aligns with the belief in strong consumer consumption, the positive impact of the general election, the continued development of National Strategic Projects (PSN), and expectations of increased investment.

Meanwhile, BI forecasts global economic growth of 3% in 2023. According to BI, the economic growth of the United States (US) and India in 2023 is better than initially projected, supported by household consumption and government expansion.

On the other hand, China's economy is projected to weaken due to limited growth in household consumption and investment.

Citing bi.go.id, as of today, the central bank uses the name "BI-Rate" to replace "BI 7-Day Reverse Repo Rate" (BI7DRR) to strengthen communication on monetary policy.

This name change, according to BI, does not alter the meaning and purpose of the BI-Rate as the stance of their monetary policy. Its operationalization remains based on Bank Indonesia's seven-day reverse repo transactions.

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."