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| Indonesia's strong economic growth is supported by rising domestic demand, household consumption and investment. (Source: Indonesia Expat) |
Specifically, BI announced to continue maintaining the 7-day term interest rate at 5.75% and maintain the overnight deposit base interest rate at 5% and the lending base interest rate at 6.50%.
Financial experts say that BI's decision to keep interest rates unchanged is consistent with market expectations as well as previous forecasts by Bloomberg and The Wall Street Journal.
The decision comes amid concerns about the stability of the rupiah, which has lost more than 2.5 percent against the dollar this quarter and is one of the weakest currencies in Asia.
BI Governor Perry Warjiyo reassured the market that the rupiah is under control under macro-prudential policy measures. BI has implemented a number of policies to encourage foreign capital inflows and stabilize the local currency, while maintaining growth-supportive interest rates.
Despite calls from Indonesian lawmakers for “bold but measured” monetary policy easing to boost economic confidence, BI remains cautious about potential inflation risks from rising rice and oil prices.
In addition, BI maintained its forecast for Indonesia's economic growth in 2023 at 4.5-5.3%. The country's inflation is expected to remain within the target range of 2%-4% before easing to 1.5%-3.5% in 2024.
Mr. Warjiyo expects the stability of the rupiah to continue, reflecting positive investor sentiment toward Indonesia's economic outlook, low inflation and attractive returns from domestic financial assets.
Indonesia's strong economic growth was supported by rising domestic demand, household consumption and investment.
* Also on September 21, the BoE decided to keep interest rates at 5.25% after a close vote at a meeting of the 9 members of the Monetary Policy Committee (MPC).
After inflation in August 2023 was lower than expected, five MPC members supported keeping interest rates unchanged, including BoE Governor Andrew Bailey, who cast the final decisive vote.
This is the first time the BoE has stopped raising interest rates after 14 consecutive increases since December 2021, according to which interest rates have increased from 0.1% to 5.25% currently.
While giving little comment on future moves, the MPC said interest rates were now high enough to ensure price stability was restored.
The committee stressed: “Monetary policy should be restrictive for a long enough period to bring inflation to the 2% target sustainably over the medium term.”
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