Bank Indonesia's Key Rate Hike Beneficial to Economic Stability: Sri Mulyani

Suci Sedya Utami    •    28 September 2018 12:40 WIB
indonesian economy (en)
Bank Indonesia's Key Rate Hike Beneficial to Economic Stability: Sri Mulyani
Finance Minister Sri Mulyani Indrawati (Photo:AFP)

Jakarta: Finance Minister Sri Mulyani Indrawati on Friday said Bank Indonesia's decision to raise its 7-Day Reverse Repo Rate can strengthen the country's economic stability.

"We need to guard our economic stability. We want to experience a stable economic momentum," the former World Bank managing director said.

Yesterday, the central bank decided to raise its 7-Day Reverse Repo Rate by 25 basis points (bps) to 5.75 percent. In addition, it also increased the Deposit Facility (DF) and Lending Facility (LF) rates by 25 bps to 5.00 percent and 6.50 percent respectively.

"The decision is consistent with ongoing efforts to lower the current account deficit within a manageable threshold while maintaining the attractiveness of the domestic financial markets, thus further strengthens Indonesia’s external resilience despite widespread global uncertainty," Bank Indonesia Governor Perry Warjiyo said.

"The government’s seriousness and concrete measures, with Bank Indonesia, to stimulate exports and reduce imports is expected to lower the current account deficit, specifically in 2019, to around 2.5% of GDP," he added.

The central bank is committed to bolster coordination with the government and other relevant authorities to maintain economic stability and bolster external resilience. It will monitor prevailing economic developments, such as the current account deficit, exchange rates, financial system stability and inflation, as follow-up measures to maintain macroeconomic and financial system stability.


(WAH)