REPUBLIKA.CO.ID, JAKARTA -- Central Bank of Indonesia (Bank Indonesia/BI) has decided to maintain its interest rate in November 2023 at 6,00 percent. BI Governor Perry Warjiyo emphasized that this decision does not only take into account inflation this year.

"BI's monetary policy, especially the interest rate, is determined based on inflation estimates for the next two years compared to the target," Perry said in BI monthly press conference in November 2023 in Jakarta, Thursday (Nov.23, 2023).

For this reason, Perry emphasized that determining current interest rate policy does not only consider current inflation. Perry said this was done because he also saw the impact of inflation itself. "The impact of interest rate on inflation takes approximately four to six quarters," he added.

Perry admitted that inflation is currently low and quite good. Even so, Perry emphasized that if BI only consider domestic inflation, there is still enough space to reduce interest rate.

However, if BI looks to the future, Perry said, there are numbers of major risks, namely inflation of imported goods. "This consists of two prices which are global food and energy prices plus the magnitude of the depresation in the rupiah exchange rate," he said.

In the results of Bank Indonesia Board of Governors Meeting (RDG BI) on 22-23 November 2023, BI decided to maintain the BI 7-Day Reverse Repo Rate (BI7DRR) at six percent. Meanwhile, the Deposit Facility interest rate is 5.25 percent and the Lending Facility interest rate is 6.75 percent.

"This decision remains consistent with the policy of stabilizing the rupiah exchange rate from the impact of high global uncertainty as well as a pre-emptive and forward looking step to mitigate its impact on inflation in imported goods so that inflation remains under control within the target of three plus or minus one percent in 2023 and 2.5 plus minus one percent in 2024," he explained.

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