Tuesday, 15 October 2019 | 06:25 WIB

BI Governor: There is Space to Lower Benchmark Interest Rate

Bank Indonesia Governor Perry Warjiyo (bankindonesia)

JAKARTA, NETRALNEWS.COM - Bank Indonesia (BI) stated that there is a potential for a reduction in the benchmark interest rate or BI 7-Day Reverse Repo Rate (BI7DRR). The space to do that is quite supportive, although BI still has to pay attention to global economic conditions, especially the development of the issue of trade war.

BI Governor Perry Warjiyo said that the interest rate reduction room was in line with the relatively stable inflation conditions until mid-2019.

Nevertheless, it will continue to look at the conditions of the global financial market, as well as the national balance of payments figures. According to him, the uncertainty of the global economy is still ongoing. This makes the Central Bank hold interest rates in May 2019.

"So if you consider low inflation, economic growth that needs to be encouraged, indeed we already know that there is room to reduce interest rates," Perry said in a statement on Tuesday (6/18/2019).

At present, a trade war between the United States (US) and China is still ongoing, British negotiations to exit the European Union or Brexit, geopolitical conditions in the Middle East, which make a reversal of foreign capital flows from developing countries, including Indonesia.

"We are still watching the condition of the global financial market and Indonesia's balance of payments in considering the opening of space for accommodative monetary policy in line with low inflation and the need to encourage economic growth in the country," Perry concluded.

For information, currently BI's benchmark interest rate is still maintained at the level of 6 percent since November 2018, with the lowest level in May 201 8 of 4.25 percent. Where is now the Deposit Facility interest rate of 5.25 percent, and the Lending Facility interest rate of 6.75 percent.