Monetary Policy Statement By The Governor Of Bank Indonesia - Bank Sentral Republik Indonesia
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October 23, 2019

No.7/ 92 /PSHM/Humas


With regard to the latest developments and the economic and monetary outlook for the coming months, Bank Indonesia adopted a series of decisions in the Board of Governors’ Meeting on September 6, 2005.  These decisions are as follows:

1.      To raise the BI rate by 50 basis points to 10.0%.

The decision to raise the BI Rate is based on the following:

                i.        Bank Indonesia estimates that CPI inflation will reach about 9% in 2005.  After factoring in the planned future increase in administered prices for fuel, inflationary pressures are predicted to rise.  Furthermore, the continued uncertainty over world oil prices could aggravate the risk of macroeconomic instability.

               ii.        The rise in the BI Rate to 10% is a policy response by BI that consistently seeks to guide expectations of inflation in line with achievement of the medium-term inflation target.  The BI Rate will thus reflect a reasonable level of real interest rates.

             iii.        This policy also takes account of indications of slowing economic growth, evident in the GDP figures for Q2/2005, and will thus help to maintain the sustainability of economic recovery.

2.      To institute exchange rate policies with effect as follows:

i.            Ban on rupiah margin trading against all foreign currencies, effective from September 15, 2005.

ii.           Launching of foreign currency swap interventions as an instrument in Open Market Operations with 1-7 day tenor, effective from September 15, 2005.

iii.         Provision of swap facilities to enable investors to take out currency risk hedging for terms of 3-6 months extendable, effective from October 1, 2005.

iv.        Amendments to the Net Open Position (NOP) regulations, effective October 1, 2005, as follows:

a.      Revoke the provisions concerning the requirement to maintain NOP between foreign currencies.

b.      Require banks to maintain the NOP at all times throughout the day.

Impose financial and administrative penalties for violation of the NOP provisions.

Annex: Press Release No. 7/92/PSHM/Humas

Jakarta, September 6, 2005
DIRECTORATE OF STRATEGIC PLANNING AND PUBLIC RELATIONS

Halim Alamsyah
Director

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