BI Keeps the BI Rate at 6.5% - Bank Sentral Republik Indonesia
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April 19, 2019

No. 11 / 32 / PSHM / Humas

Today, Bank Indonesia decided to keep the BI Rate at 6.5%. At this level, the BI Rate remains consistent with achievement of the 2010 inflation target set at 5% ±1%. The present direction in monetary policy is also regarded as conducive to the economic recovery process and the operation of banking intermediation.

In the opinion of the Bank Indonesia Board of Governors Meeting, Indonesia's economic performance showed further improvement during October 2009. Externally, the latest estimates point to improvement in Indonesia's exports, driven by the strengthening global economic recovery and rising world commodity prices. At home, private consumption is gathering added momentum in keeping with inflation and sustained consumer confidence in the outlook for the economy. In response to these developments, the Indonesian economy is predicted to chart more vigorous growth in Q4/2009 compared to the preceding quarter.

Concerning prices, inflation in October 2009 recorded decline, maintaining a course below the historical trend. Supporting this was the strengthening of the rupiah and softening public expectations of future inflation reflected in the ongoing decline in core inflation. In response to these developments, inflation in 2009 is predicted at the lower end of the 4.5±1% (yoy) inflation target. 2010 inflation is forecasted to return to normal levels in the 5±1% range alongside renewed strength in domestic economic activity and commodity prices. In line with the strong commitment by Bank Indonesia and the Government, inflation is expected to continue declining in the medium term to the same level with inflation in the neighbouring countries.

The banking industry maintained overall stability with continued high levels of the CAR and NPLs contained below 5%. Banks demonstrated improved response to monetary relaxation with progressive adjustments in bank deposit and lending rates. At an aggregated level, the banking system reports ample liquidity alongside steady reduction in the segmentation of the money market. In line with these developments, bank lending especially in Rupiah continues to chart the increasing trend and being absorbed by sectors comprised of trades, transportations, agricultures and energy (electricity). Furthermore, bank lending in the forms of micro and small credits continue to expand fast enough to potentially create employment and support the improvement in the equality of economic growth. In view of the stated commitments of banks to further adjustments in deposit and lending rates, combined with the improving economic outlook, bank lending is predicted to chart continued expansion. Bank Indonesia will closely monitor developments and work towards even greater efficiency into the banking system in order to bring further improvement in the banking intermediary function.

A complete account of the deliberations of the November 2009 Board of Governors’ Meeting, presenting macroeconomic developments, monetary policy and the outlook for 2009, will be published in the Monetary Policy Report (MPR) on the Bank Indonesia

Jakarta, November 4, 2009
Bank Indonesia
Office of the Governor

Dyah N.K. Makhijani
Director

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