Bank Indonesia holds interest rate at 6%

BANK INDONESIA / BI - JAKARTA. The meeting of the Bank Indonesia governing council (BI RDG) in April 2019 decided to hold the benchmark interest rate at 6%. Likewise, deposit facility and lending facility interest rates remained at 5.25% and 6.75% respectively.

BI Governor Perry Warjiyo said that this decision was in line with BI's goal to reduce the 2.5% current account deficit against gross domestic product (GDP). Current interest rates are still attractive to the Indonesian financial market.

"The decision is in line with efforts to strengthen Indonesia's external stability," Perry explained at a press conference at the BI building complex on Thursday (25/4).

Bank Indonesia estimates that economic growth in the first quarter of 2019 will remain strong. Nevertheless, the seasonal pattern of investment slowed down a little. BI estimates that economic growth will remain in the range of 5% -5.4%.

The central bank also estimates that the balance of payments will be surplus. Foreign capital inflows reached US $ 5.5 billion.

BI views the rupiah exchange rate to be stable in accordance with fundamental values. The rupiah exchange rate strengthened 1.17% year to date, supported by foreign capital inflows.

The central bank noted March 2019 inflation was low and under control at the target of 3.5%. The March 2019 consumer price index rose 0.11% on a monthly basis, or 2.48% on an annual basis.

BI sees the global economy still slowing down. The economy of the United States (US) weakened due to the reduction in post-fiscal stimulus after a decrease in corporate tax, reduced income, and weakening the confidence of business people.

China's economy is also still sluggish even though the government has carried out fiscal expansion through development tax and infrastructure cuts. Similarly, Europe also grew slowly due to weakening exports.