The Central Bank of Indonesia (BI) has announced its decision to keep the 7-day reverse repurchase rate, the country’s policy rate, unchanged at 5.75%. This marks the fourth consecutive meeting in which BI has opted to hold interest rates steady. The decision aligns with analysts’ expectations and comes as BI anticipates a continued deceleration in inflation.
The governor of BI has stated that core inflation remains within the target range, and the central bank expects headline inflation to return to its desired level in the third quarter of this year.
Furthermore, BI has affirmed its commitment to implementing robust measures to support the rupiah and combat inflation stemming from imported goods. The aim is to ensure stability in prices and safeguard the purchasing power of consumers.
The rupiah has demonstrated strength since the beginning of 2023, appreciating by over 4% against other emerging Asian currencies. This positive performance indicates the market’s confidence in the Indonesian economy and its potential for growth.
April witnessed a notable slowdown in inflation, with the rate dropping to 4.33% compared to 5.95% in the same period last year. This moderation followed a series of interest rate hikes by BI, totaling 2.25% between August 2022 and January 2023.
The Bank of Indonesia’s decision to maintain interest rates reflects a prudent approach to managing the country’s economic conditions. By closely monitoring inflation and implementing targeted measures, the central bank aims to ensure a stable and sustainable economic environment.
As Indonesia moves forward, continued vigilance and strategic policy adjustments will be essential to address inflationary pressures, support economic growth, and foster a favorable investment climate.