Jakarta, 18 January 2024 – Bank Indonesia (BI) decided to maintain the benchmark interest rate or BI 7-Day Reverse Repo Rate (BI7DRR) at the level of 6 percent at the first Board of Governors Meeting (RDG) in 2024. This decision is in line with the central bank’s efforts in maintaining national economic stability amidst global uncertainty.
The Governor of Bank Indonesia, Perry Warjiyo, stated that this decision was taken after considering several main factors, including controlled inflation projections, stability of the rupiah exchange rate, and resilient economic growth.
“The inflation rate at the end of 2023 was recorded at 3.1 percent year-on-year (yoy), still within Bank Indonesia’s target range of 3.0±1 percent. We project inflation will remain under control throughout 2024,” said Perry in virtual press conference.
Apart from the reference interest rate, BI also maintained the Deposit Facility interest rate at 5.25 percent and the Lending Facility interest rate at 6.75 percent. This policy is expected to support macroeconomic and financial system stability.
Decision Support Factors
Some of the key considerations underlying the decision include:
1. Rupiah Exchange Rate Stability
-The Rupiah has strengthened 0.8% since the beginning of the year
-Foreign exchange reserves reached US$145 billion as of December 2023
2.Economic growth
-2024 economic growth projection: 5.1-5.4%
-Driven by domestic consumption and investment
3.Global Conditions
-Global economic slowdown
-The downward trend in inflation in various countries
-Expectations of the Fed’s monetary policy easing.
Market Response
The market responded positively to BI’s decision by:
JCI strengthens 0.5% to 7,200
Rupiah stable in the range of Rp15,500 per US dollar
10-year government bond yield fell 5 basis points
Bank Indonesia will continue to implement a policy mix to maintain macroeconomic stability and encourage national economic recovery amidst still high global uncertainty.