BI raised the rate again to 4.75%, helping rupiah stabilization

BANK INDONESIA / BI - JAKARTA. Bank Indonesia Board of Governors agreed to raise again the BI 7-day Reverse Repo Rate by 25 bps to 4,75% on Wednesday (5/30), meeting the market expectation.

BI also raised the Deposit Facility (DF) and Lending Facility (LF) rates by 25 bps to 4.00% and 5.50% respectively, effective May 31 2018.

"This policy is a preemptive step, front-loading, and ahead of the curve of Bank Indonesia to strengthen stability, especially exchange rate stability against higher US interest rate forecasts and rising risks in global financial markets," said Governor Perry Warjiyo today, Wednesday (5/30).

The decision to hike interest rate is part of Bank Indonesia's short-term policy which prioritizes monetary policy on stability, particularly for the rupiah exchange rate.

In addition to maintaining the rupiah, the decision to increase interest rates is considered consistent with efforts to control inflation within the target corridor of 3.5±1% in 2018 and 2019.

This is the second increase in May, more quickly to aticipate the escalating risks in the global financial market. Going forward, Bank Indonesia will continue to calibrate both domestic and global issue to utilize the room of measurable increase in interest rates.