BI's Benchmark Interest Rate is Relatively High in ASEAN

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Adi Ahdiat 26/09/2022 16:40 WIB

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Indonesia's benchmark interest rate is currently higher than that of Laos, Malaysia, Singapore, Thailand, and Cambodia.

ASEAN Central Bank Reference Interest Rates (September 2022*)

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BI's Benchmark Interest Rate is Relatively High in ASEAN

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ASEAN Central Bank Reference Interest Rates (September 2022*)

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Bank Indonesia (BI) raised its benchmark interest rate, the BI-7 Day Reverse Repo Rate (BI7DRR), from 3.75% to 4.25% in September 2022.

"The decision to raise interest rates is a front-loaded, pre-emptive, and forward-looking measure to lower inflation expectations and ensure core inflation returns to the target of 3.0±1% in the second half of 2023," BI explained in its press release on Thursday (22/9/2022).

BI also stated that the increase in the benchmark interest rate aims to strengthen the policy of stabilizing the Indonesian Rupiah exchange rate amid high uncertainty in the global financial market.

The current BI7DRR level is identical to that of the Philippines, which recently raised its benchmark interest rate from 3.75% to 4.25% in September 2022.

The BI7DRR is also currently higher than the benchmark interest rates in other ASEAN countries, namely Laos, Malaysia, Singapore, Thailand, and Cambodia.

However, Indonesia's benchmark interest rate remains below that of Vietnam, Brunei Darussalam, and Myanmar, as detailed in the graph.

In addition to having a relatively high benchmark interest rate, the Indonesian Rupiah's exchange rate in September 2022 remained relatively stronger than its neighboring countries.

"As of September 21, 2022, the Rupiah has depreciated by 4.97% (ytd) compared to the end of 2021, relatively better than the depreciation of several other developing countries' currencies, such as India (7.05%), Malaysia (8.51%), and Thailand (10.07%)," BI explained.

"Going forward, Bank Indonesia will continue to strengthen its policy of stabilizing the Rupiah exchange rate in line with its fundamental value to support efforts to control inflation and macroeconomic stability," it continued.

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."