BI rate predicted to stay at 7.5%

JAKARTA. University of Gadjah Mada economist A. Tony Prasetyantono predicts that Bank Indonesia’s benchmark interest rate (BI rate) will be maintained at 7.5 percent during the BI board of governors meeting on Tuesday.

He said the BI rate would likely stay unchanged as inflation had begun to stabilize, as had the rupiah.

“I predict that the BI rate will be maintained at 7.5 percent. Inflation has started to lean slightly toward 7.32 percent so no change in the BI rate is needed. The rupiah exchange rate of about Rp 11,300 to the US dollar is also considered quite comfortable. It’s neither overvalued nor too weak,” Tony said on Monday as quoted by kompas.com.

The head of economists at state lender PT Bank Mandiri Tbk, Destry Damayanti, shared a similar view. However, she said that uncertainties both at domestic and global level still needed to be anticipated.

“[The BI rate] will be held at 7.5 percent. We are still facing uncertainties at both the domestic and global level. However, we must remain vigilant,” said Destry.

The economist said Indonesia’s trade surplus was among the major reasons for the central bank not to increase the BI rate. However, the surplus was not triggered by increases in exports so that the changes still needed to be anticipated, she went on.

“Indonesia’s trade balance recorded a surplus because of a deep decline in imports instead of rapid grow in exports. So there will be still a number of risks in the future,” said Destry. (ebf)