JAKARTA – Bank Indonesia (BI) has set BI rate up 25 basis points (bps) to 6.25% from the previous 6%. This decision is made based on the Meeting of the Board of Governors of BI that took place from yesterday (23/4) until this afternoon (24/4).

Erwin Haryono, Assistant Governor of Department of Communication of BI, confirmed that the BI rate increase is intended to improve the stability of rupiah rate against the worsening global situation. “It is a pre-emptive and forward-looking measure, ensuring the inflation remains at around 2.5% this year and in 2025, in line with the stance of pro-stability monetary policy,” he said in the press release quoted Wednesday (24/4).

In addition, Erwin said that the macroprudential and payment system will remain pro-growth in order to support economic growth. The macroprudential is relaxed in order to support bank credit distribution to business and household.

It is also mentioned that Bank Indonesia will continue to strengthen its mix of monetary, macroprudential, and payment system policies, for example, through increasing the interest rate structure in Rupiah money market, which is in line with the BI-Rate hike, higher U.S. Treasury yield, and global risk premium, to maintain attractive yields and portfolio inflows to domestic financial assets.

In addition, there is also the stabilisation of Rupiah through foreign exchange market intervention with a focus on spot and Domestic Non-Deliverable Forward (DNDF) transactions, as well as government securities (SBN) in the secondary market. Then, BI will also strengthen the competitive SBN term-repo and FX swap transaction strategies to maintain adequate liquidity in the banking industry.

Lastly, BI will also reinforce the pro-market monetary operations strategy for effective monetary policy, which includes optimising Bank Indonesia Rupiah Securities (SRBI), Bank Indonesia Forex Securities (SVBI) and Bank Indonesia Forex Sukuk (SUVBI). (LK/ZH)