Illustration (Photo:MI/Usman Iskandar)
Illustration (Photo:MI/Usman Iskandar)

BI's Key Rate Once Again Maintained at 6%

English macroeconomics (en) indonesian economy (en)
Wahyu Dwi Anggoro • 25 April 2019 20:10
Jakarta: The Bank Indonesia (BI) Board of Governors has once again decided to hold the BI 7-Day Reverse Repo Rate at 6.00%, while also maintaining the Deposit Facility (DF) and Lending Facility (LF) rates at 5.25% and 6.75%, respectively.
 
"The decision is consistent with continuing efforts to strengthen the external stability of the national economy," the central bank said in a press statement released on Thursday, April 25, 2019.
 
"Bank Indonesia is also strengthening coordination with the Government and other relevant authorities to maintain economic stability, particularly in terms of controlling inflation and reducing the current account deficit, while simultaneously building economic growth momentum through solid domestic demand, including stimulating exports and tourism as well as attracting foreign capital inflows," it noted.

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According to the central bank, economic growth in the United States is moderating on lower incomes and retreating business confidence, limited fiscal stimuli as the impact of the corporate tax cuts fades, and ongoing structural labour market issues. Similarly, China’s economy is still decelerating although the authorities have implemented expansive fiscal policy in the form of tax reductions and infrastructure development.
 
"Congruent with global economic moderation, world trade volume and international commodity prices are tracking downward trends, notwithstanding the oil price, which increased during the previous period due to geopolitical factors," it stated.
 
"The global monetary policy response has not been as tight as previously anticipated, thus alleviating global financial market uncertainty. On one hand, global economic developments represent a clear challenge in terms of stimulating exports, yet on the other hand, less global economic uncertainty has attracted foreign capital flows to developing economies, including Indonesia," it added.
 
At home, strong consumption growth is expected to persist on maintained public purchasing power and continuing fiscal stimuli, including social aid disbursements and election spending. Alought it has declined slightly in line with seasonal trends at the beginning of the year, investment is predicted to regain momentum in subsequent periods, supported by improving business confidence and ongoing infrastructure development projects.
 
Moving forward, the promising domestic economic outlook is supported by solid domestic demand in line with maintained confidence in the national economy. Furthermore, the policy mix instituted by Bank Indonesia, the Government and other relevant authorities will continue to sustain economic growth momentum, which Bank Indonesia projects in the 5.0-5.4% range in 2019.
 

(WAH)
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