Statement by the Governor of Bank Indonesia: BI Rate Unchanged at 8.0% - Bank Sentral Republik Indonesia
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October 22, 2020
No. 10/19/PSHM/Humas

In the Board of Governors' Meeting convened today, 3 April 2008, Bank Indonesia decided to keep the BI Rate unchanged at 8.0%. This decision was taken after careful observation and consideration of current conditions and outlook in the global, regional and domestic economy, as well as progress towards the Government-set inflation target for 2008 and 2009.

In the view of the Bank Indonesia Board of Governors, the Indonesian economy entered a slowing phase during the first quarter of 2008 in line with the present adverse trends in the global economy, with growth below the original projection. This resulted most importantly from flagging growth in exports in response to world economic slowdown.

The rupiah exchange rate remained stable, providing a bulwark against increased inflationary pressure from rising international commodity prices. The average rupiah exchange rate in Q1/2007 came to Rp 9,258.00 to the US dollar. Exchange rate stability was reinforced by the performance of Indonesia's balance of payments, which again recorded a surplus in keeping with high international commodity prices. International reserves thus mounted to USD59 billion at the end of Q1/2008, equivalent to 5.3 months of imports and servicing of official debt.

"Inflationary pressure is forecasted to remain quite strong, dominated by imported inflation related mainly to high international commodity prices," affirmed Bank Indonesia Governor Burhanuddin Abdullah. In a further action to curb inflationary pressure, Bank Indonesia will work continually to manage public expectations of inflation, among others by curbing excess liquidity on the money market. Inflation in March 2008 reached 0.95% (mtm), bringing first quarter CPI inflation to 3.41% (qtq) or measured annually 8.17%.

Bank performance stayed the course with steady improvement in the intermediary function. In February 2008, bank credit expanded by Rp 14.8 trillion (1.4%) to Rp 1,045.9 trillion. Depositor funds also climbed 0.2% in the same month from Rp 1,471.2 trillion (January 2008) to Rp 1,474.5 trillion (February 2008). With credit expansion ahead of growth in depositor funds, the LDR for the banking system widened from 70.1% (January 2008) to 70.9% in February 2008.  Despite the rise in the LDR, NPLs remained below 5% at 4.78% gross and 2.0% net.

"Looking ahead, in Bank Indonesia's view the economy will continue to face challenges given the uncertainties besetting the global economy. The Indonesian economy in 2008 is predicted to advance more slowly compared to 2007. Sustained high inflationary pressure is expected to pose added challenges for achieving the inflation target, while the rupiah exchange rate will continue to move in line with fundamentals," added Burhanuddin. Bank Indonesia will closely monitor developments in the economy and inflation, including sources of inflation. In this regard, Bank Indonesia believes that with close coordination and hard work by all concerned parties, it will be possible to minimise the impact of global economic uncertainties and sustain the momentum for economic growth.
Jakarta, 3 April 2008
Office of The Governor

Dyah N.K. Makhijani



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