BI Rate raised by 25 bps to 6%

JAKARTA. Bank Indonesia unexpectedly raised its key interest rate for the first time since 2011. In the Board of Governors' Meeting convened on June 13th 2013, Bank Indonesia decided to increase the BI rate by 25 basis points (bps) to 6%, while maintaining the deposit facility and lending facility rates at 4,25% and 6,75%, respectively.

This is Agus Martowardojo’s first rate-decision meeting after taking over from Darmin Nasution last month. The policy was part of Bank Indonesia’s policy mix to response pre-emptively to rising inflation expectations and to maintain macroeconomic stability and financial system stability amid increasing uncertainty in global financial markets.

Central Bank promises to continues to stabilize the rupiah exchange rate in line with its economic fundamentals and maintains adequate liquidity in the foreign exchange market.

"Bank Indonesia will continue to strengthen its monetary operation by enhancing their monetary instruments and financial market deepening, both in rupiah and foreign exchange," said Peter Jacobs, Director of Communications Department Bank Indonesia.

He added, macroprudential policies are being prepared to prevent excessive risks in certain sectors. Policy coordination with the Government will also be strengthened by focussing on the efforts to minimize inflationary pressure and to maintain macroeconomic stability as well as financial system stability. (Dyah Megasari Anjaya)