STATEMENT OF THE GOVERNOR OF BANK INDONESIA : BI  Shall Continue the Tight Monetary Policy : BI Rate at 12,75% - Bank Sentral Republik Indonesia
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October 25, 2020
No.8/ 12 /PSHM/Humas

In the Meeting of the Board of Governors (RDG) of Bank Indonesia today, March 7, 2006, Bank Indonesia decided to maintain the tight monetary policy as a reflection of the commitment to control the relatively high pressure of inflation in the future. Therefore, Bank Indonesia has decided to keep the applicable BI Rate at 12,75%.

In the RDG that evaluates the economic development in February 2006, the Board of Governors thinks that macroeconomic stability has been relatively maintained, even though risk factors still exist both internally and externally that may forestall the economic growth and disturb macroeconomic stability.  Internally, the Board of Governors noted several factors possible of giving pressure to the inflation caused by one thing among others; the high liquidity excess, the plan to increase several administered prices, and the pressure of volatile food inflation caused by difficulties in supply and distribution after the occurrences of natural disaster in various areas in Indonesia.

Externally, the still rising prices of oil is a considerable factor besides the tight monetary cycle in the US that lasts longer than predicted. Although several risk factors still exist, the recently announced investment policy by the Government is expected to bring positive outcome for the economy.

From banking point of view, the performance of banking until late January 2006 has been decreasing but on the whole is still well-maintained because it can still be tolerated and banking can deal with the risk it is facing. Even though a decrease as predicted before has occurred as a January effect, the credit placement to UMKM in January 2006 increased from 51% to 51,9%. The rising credit placement and credit outstanding of UMKM is expected to continue based on several leniencies given by Bank Indonesia as stipulated in the Banking Policy Package of January 2006.

Jakarta,  March 7, 2006
Budi Mulya



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