Governor Nominee Says Bank Indonesia Can Support Both Growth and Stability
Jakarta. Perry Warjiyo, the nominee to become governor of Bank Indonesia, told a hearing at the House of Representatives on Wednesday (28/03) that the central bank can support both economic growth and financial stability at the same time.
Earlier, BI has said it had to put stability before growth when deciding monetary policy, because a stable environment is needed for an economy to expand.
"The government and many other people think BI should help to accelerate growth. I feel quite sure that maintaining stability and pursuing strong economic growth don't stand in contradiction," Perry told the House's financial commission, which is conducting a "fit and proper" test to consider his nomination.
The commission is expected to say later today whether it endorses Perry's nomination by President Joko "Jokowi" Widodo. The House is due to meet in early April to consider the appointment.
In recent years, Indonesia's annual economic growth rate has been standing at about 5 percent, occasionally prompting calls for BI to keep lowering its benchmark rate. The rate was lowered by 200 basis points in 2016 and 2017. Currently, there is no room for further easing.
Last week, the central bank held the benchmark rate unchanged for the sixth consecutive meeting, saying the current level is sufficient to maintain stability and support growth.
In 2017, Southeast Asia's largest economy grew 5.07 percent. Although that was the fastest pace in four years, the growth rate was near the lower end of BI's projection of between 5.0 percent and 5.4 percent for 2017.
Perry said on Wednesday that Indonesia will likely grow between 5.2 percent and 5.3 percent in 2018. BI has forecast a range of between 5.1 percent and 5.5 percent.
He noted several global risks that could complicate efforts to maintain macroeconomic stability, including plans by the Federal Reserve to further raise United States interest rates this year, protectionist policies by some governments and fluctuating oil prices.
The 59-year-old nominee, who has a doctorate in monetary and international economics from Iowa State University, is currently a deputy BI governor.
If the nomination is approved by the House, as expected, Perry will succeed Agus Martowardojo, whose five-year term is due to end in May.
Additional reporting by Tabita Diela and Gayatri Suroyo
Reuters
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