Jakarta. Bank Indonesia (BI) has decided to maintain its benchmark interest rate (BI Rate) at 6 percent, the deposit facility rate at 5.25 percent, and the lending facility rate at 6.75 percent during its Board of Governors Meeting on Wednesday.

Governor Perry Warjiyo said that this decision aligns with the monetary policy direction aimed at ensuring inflation remains within the target range of 2.5 percent for 2024 and 2025 while promoting sustainable economic growth. He emphasized the importance of stabilizing the exchange rate of the rupiah due to increasing uncertainties in global financial markets.

“Moving forward, BI will continue to assess the potential for interest rate reductions while considering inflation projections, the exchange rate of the rupiah, and economic growth,” Perry Warjiyo said.

BI is also reinforcing its monetary, macroprudential, and payment system policies to maintain stability and support sustainable economic growth. The central bank continues to implement macroprudential measures to encourage banking credit financing for priority sectors such as small and medium-sized enterprises (SMEs) and green economy initiatives while adhering to prudential principles.

Previously, economist Teuku Riefky from the think tank LPEM FEB University of Indonesia anticipated that BI would maintain the benchmark interest rate at 6 percent during the Board of Governors Meeting on October 15-16, 2024. Despite a deflationary trend observed over the past five months, BI is expected to keep the rate steady.

Both BI and the Federal Reserve began an era of monetary easing in September 2024. Additionally, rising global geopolitical tensions, China's stimulus program, and the upcoming US elections are factors influencing foreign capital flows into Indonesia and fluctuations in the rupiah's exchange rate in the near future.

“Any potential for further policy cuts should be reserved to address the risk of prolonged deflationary trends,” Riefky said.