JAKARTA. Bank Indonesia (BI) estimates that the inflation of the Consumer Price Index (CPI) will still remain high at 5.6% year-on-year (yoy) at the end of 2022. In the meantime, BI is making preparation to boost the reference interest rate in order to obtain the inflation target of 2.4%-3% in the first half of 2023.
“The inflation of CPI is estimated to reach 5.6% yoy at the end of this year, whereas the consensus forecast agrees on 5.9% yoy instead,” Perry Warijyo, Governor of Bank Indonesia (BI), revealed during the Result Announcement of Monthly Board of Governors Meeting of November 2022 yesterday (17/11).
BI will ensure that inflation will come down to the initial target of 2.4%-3%, with ±1% deviation, even earlier than before or in the first half of 2023. In order to suppress the inflation rate, BI will implement several strategies, including increasing the reference interest rate or BI 7-Day Reverse Repo Rate (BI7DRR). Recently, BI boosted its reference interest rate by 50 basepoints (bps) to 5.25%. Then, BI also elevated the deposit facility interest rate by 50 bps to 4.50%, and the lending facility interest rate by 50 bps to 6,00%.
BI also arranges a policy coordination between the central and regional government through the Central and Regional Inflation Control Team, as well as the National Movement of Food Inflation Control, to keep the food inflation in check. (AM/ZH)