January 20, 2022

Bank Indonesia sends policy change signal in advance = Governor

Bank Indonesia Governor Perry Warziyo said on the 3rd that inflation will not exceed 3% until 2023, but has begun a dialogue in advance on the possibility of a change in the policy interest rate. He showed a policy to prevent market turmoil. Said in an interview with the Reuters Next Meeting.

 

Governor Warjiyo said he would “go to market” without hesitation if necessary to stabilize the rupiah currency.

 

The central bank has begun tightening its accommodative monetary policy following the pandemic of the new coronavirus as the economic outlook improves, and plans to begin declining liquidity in the banking system next year.

 

Indonesian price pressures are relatively mild compared to many countries recovering from the slump in the Corona slump, but inflation is on the rise and November was the highest growth in 17 months.

 

Governor Warjiyo reiterated his policy of keeping the main policy rate unchanged at 3.50%, the lowest ever, until there are signs of accelerating inflation. It’s the second quarter or the beginning of the third quarter of the year. “

 

“However, interest rate decisions need to be forward-looking in nature,” he said.

 

He said he would explain the details of the liquidity reduction plan in advance, and mentioned raising the reserve requirement ratio as a possible measure.

 

He explained that the interest rate differential between rupiah assets and US Treasuries will remain attractive to investors to prevent large-scale outflows of funds, but the situation is in terms of overcoming unstable exchange rate movements. Recognized that it was much better than it used to be.

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