Bank Indonesia Opens Possibility of Lowering Benchmark Interest Rate in 2024

MONETARY POLICY - JAKARTA. Bank Indonesia (BI) opens the possibility of lowering the benchmark interest rate 2024. 

However, BI Governor Perry Warjiyo did not explain exactly when the BI interest rate would start to be lowered. Only, at the December 2023 meeting, Perry revealed that the interest rate cut would begin in the second semester of 2024. 

“With future directions, of course, I convey there is room for lowering the BI rate. There will be. However, we must look at several criteria,” said Perry, on Wednesday (17/1) in Jakarta. 

Perry explained the criteria referred to are. First, how fast is the strengthening of the rupiah exchange rate? 

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Second, inflation remains controlled, especially core inflation, and also the movement of food inflation. 

Third, how BI sees credit support in financing the economy. 

With these three conditions and then BI cuts the interest rate, of course, this will support the growth of the Indonesian economy this year. 

“So, it still exists. However, be patient. We must look at domestic and global conditions. How the global condition subsides and ensures inflation is controlled,” he revealed. 

Furthermore, Perry predicts that the growth of the Indonesian economy in 2024 will increase from 2023. 

From his calculations, the growth of the Indonesian economy this year may be 4.7% YoY to 5.5% YoY, or higher than the 2023 outlook of 4.5% to 5.3%.