To Maintain Inflation Stability, BI Holds Reference Interest Rate at 3.5%

The Bank Indonesia (BI) Board of Governors' Meeting (RDG) on April 18-19, 2022, decided to maintain the BI 7-Days Reserve Repo Rate (BI7DRR) at 3.5%. This is the 14th time BI has maintained its benchmark interest rate at this level since February 2021.

BI also maintained the Deposit Facility interest rate at 2.75% and the Lending Facility interest rate at 4.25%.

"This decision is in line with the need to maintain exchange rate stability and control inflation, as well as efforts to continue to encourage economic growth, amid increasing external pressures related to the Russia-Ukraine geopolitical tensions and the accelerating normalization of monetary policy in advanced economies," said BI Governor Perry Warjiyo in a press statement following the BI Board of Governors' Meeting in Jakarta on Tuesday (April 19, 2022).

BI is also continuing to optimize its policy mix strategy to maintain stability and support economic recovery through various measures, as follows:

1. Strengthening the rupiah exchange rate policy to maintain exchange rate stability.
2. Continuing the implementation of accommodative macroprudential policies.
3. Continuing the policy of transparency of the base interest rate for credit (SBDK) and deepening assessments of developments in banks' operational income sources.
4. Ensuring the adequacy of money needs, money distribution, and cash services.
5. Increasing the maximum value that can be stored in electronic money from Rp10 million to Rp20 million and the monthly transaction limit from Rp20 million to Rp40 million.
6. Strengthening international policies by expanding cooperation with central banks and other partner country authorities.

BI is also continuing to strengthen policy synergy with the Government and the Financial System Stability Committee (KSSK) in order to control inflation, maintain monetary and financial system stability, and increase credit/financing to the business world in priority sectors to encourage economic growth, exports, and economic and financial inclusion.

Furthermore, BI estimates that the global economy will continue to grow, although lower than previously projected, accompanied by high global financial market uncertainty. The economic growth of various countries is expected to be lower than previously estimated.

With these developments, BI revised its forecast for global economic growth in 2022 to 3.5% from the previous 4.4%. The central bank also revised its forecast for domestic economic growth to 4.5-5.3% in 2022, lower than the initial estimate of 4.7-5.5%.