Bank Indonesia (BI) decided to keep its key rate, or BI 7-Day Reverse Repo Rate (BI7DRR), unchanged at 3.5 percent during its meeting of board of governors on January 19-20, 2022.

The central bank also maintained the deposit facility rate at 2.75 percent and lending facility rate at 4.25 percent.

“This decision is relevant to the need to maintain the stability of inflation rate, exchange rate, and financial system as well as an effort to boost economic growth in the midst of increasing external pressures,” BI Governor Perry Warjiyo noted during a press conference here on Thursday.

Warjiyo remarked that the 2021 inflation remained low and supported economic stability, with the consumer price index (IHK) recorded at 1.87 percent. The 2021 inflation was lower year-on-year as compared to the previous year and was below the target range of two to four percent.

He attributed the development to less strong domestic demand due to the COVID-19 pandemic, stable exchange rate, controllable inflation, adequate supplies, smooth foodstuff distribution, and synergy between the central bank and the government to maintain price stability.

Warjiyo forecast the 2022 inflation rate to still be kept under control in the range of two to four percent in line with aggregate supply that is still sufficient to meet the rising demand in addition to the expectations of controllable inflation, stable exchange rate, and positive responses to the policies to the central bank and government.

“BI is committed to maintaining price stability and strengthening coordination with the government through central and regional inflation controlling teams to keep the inflation and IHK within their target range,” he stated.

Warjiyo noted that the rupiah’s exchange rate was also kept under control owing to BI’s stabilization steps and resilience of Indonesia’s external sector amid continued uncertainty about the global financial markets.

The rupiah weakened 0.77 percent point-to-point and 0.01 percent on a pro rata basis on January 19, 2022, as compared to December 2021. However, the rupiah still performed better as compared to the currencies of several other developing nations.

Source: Antara News