BI Rate Maintained at 6,75% - Bank Sentral Republik Indonesia
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May 27, 2019
No. 13/ 27 /PSHM/Humas

In the Board of Governors Meeting convened on 9 August 2011, Bank Indonesia decided to keep the BI rate unchanged at 6.75%. Bank Indonesia views that the current BI Rate level is still consistent with the efforts to maintain macroeconomic and financial system stability and remains support stronger economic growth. Bank Indonesia is confident that the impact of the recent turmoil in the global financial markets due to the downgrade of US credit rating to the domestic financial market is limited, and can be contained with continuous monitoring of market development and coordination with the Government. Bank Indonesia is confident that the implementation of this policy will be able to maintain macroeconomic stability and keeping inflation within the targets, that is, 5%±1% in 2011 and 4,5%±1% in 2012.

The Board of Governors view that the performance of domestic economy continues to strengthen. The economic growth in Q2/2011 is satisfactory, i.e. as forecasted at 6.5%, and is forecasted to accelerate. The economy is forecasted to grow at 6.6% in Q3/2011 and trough out 2011. This stronger growth performance is bolstered by a remained solid export performance, household consumption also remains strong, and investment is forecasted to grow faster due to higher demand and the realization of Government’s capital expenditure. By economic sector, the growth are projected to be led by the trade, hotels and restaurant sector; transportation and communication sector; and manufacturing sector.

Indonesia’s balance of payments in Q3/2011 is forecasted to remain posting a surplus albeit lower than the surplus in Q2/2011. Accelerating domestic economic activities are projected to boost imports, particularly oil and gas, that potentially put pressures on current account. Nevertheless, the pressures on current account can be compensated by a surplus in capital and financial account due to the continuing large capital inflows. In line with the development in the balance of payments, international reserves at the end of July, 2011 reached USD 122.7 billion, or equivalent to 7.0 months of imports and external debt services of the Government.

The rupiah exchange rate is projected to remain stable with a tendency to moderately appreciate. In July 2011, the Rupiah appreciated by 0.95% (ptp) to Rp 8,496 per USD with lower volatility. The movements of the Rupiah in July 2011 were also influenced by high corporate demand for foreign exchange due to their larger import payments. However, the increase in the foreign exchange demand can still be offset by foreign exchange supply as large capital inflows continues.

Inflation pressure has been under control, as reflected by inflation in July that was still in line with its seasonality. The CPI inflation in July 2011 recorded at 0.67% (qtq) so that it annually decelerates to 4.61% (yoy). The inflation in July was relatively normal compared with its historical pattern. Going forward, inflationary pressure is still emanating from the increase in household consumption during Ramadhan and Eid holidays. Nevertheless, Government policies on securing supply of foods, including through imports, is predicted to mitigate volatility of the prices further so that inflation will be under control.

On the other hand, banking developments remained stable, accompanied by a steady improvement in banking intermediation. The stable condition of the banking industry is marked by secure level of capital, with capital adequacy ratio (CAR) above the minimum level at 8% and non-performing loans (NPLs) gross managed at a comfortable level below 5%. Meanwhile, credit disbursement to finance economic activities continues, reflected in rising credit growth that reached 23.6% (yoy) in July 2011. Bank Indonesia will sustain efforts to optimize the intermediation function of the banking sector in bolstering national economic expansion while continuously maintaining the stability of the overall banking system.

A complete result of the August 2011 Board of Governors Meeting, presenting macroeconomic developments and monetary policy, will be published in the Monetary Policy Report (MPR).

Jakarta, 9 August 2011
Office of the Governor

Difi A. Johansyah
Head of Bureau

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