Chief Economist of BTN, Myrdal Gunarto, views the increase in the\nBI-Rate to 5.5 per cent as an anticipatory step to maintain rupiah\nexchange rate stability and reduce the risk of external pressures that\ncould impact domestic inflation and financial system stability.<\/p>\n
\u201cAmid rising global financial market volatility, particularly due to\nthe escalation of geopolitical tensions and shifts in international\ncapital flows, the strengthening of the monetary policy mix is expected\nto maintain the attractiveness of domestic financial assets while\nreinforcing investor confidence in the Indonesian economy,\u201d Myrdal said\nin his publication in Jakarta on Tuesday.<\/p>\n
Myrdal noted that the weakening of the rupiah exchange rate in recent\nweeks has increased the risk of imported inflation, especially for\nsectors with high dependence on raw materials, capital goods, and\nimported components.<\/p>\n
Therefore, he believes the stabilisation measures taken by Bank\nIndonesia are expected to accelerate the market adjustment process while\nkeeping inflation expectations under control.<\/p>\n
From the economic growth perspective, IRRD Economic Research BTN\nassesses that domestic economic fundamentals remain relatively\nstrong.<\/p>\n
Various sectors supported by domestic activity, infrastructure\ndevelopment, the housing sector, food security, energy, downstreaming,\nand natural resource-based exports are expected to remain the engines of\nnational economic growth throughout 2026.<\/p>\n
\u201cWith support from sustained investment activity and banking\nintermediation, Indonesia\u2019s economic growth is estimated to remain in\nthe range of 5.2 per cent this year,\u201d Myrdal said.<\/p>\n
Nevertheless, Myrdal cautioned that the benchmark interest rate hike\ncould potentially exert pressure on sectors sensitive to funding costs\nand public purchasing power.<\/p>\n
Therefore, he noted, the balance between macroeconomic stability and\nsupport for economic growth will remain an important factor in the\ndirection of future monetary policy.<\/p>\n
\u201cGoing forward, we see that room for BI-Rate adjustments will be\nhighly dependent on the development of the Rupiah exchange rate,\ninflation, foreign capital flows, and global economic dynamics,\u201d Myrdal\nsaid.<\/p>\n
Assuming external pressures begin to ease and exchange rate stability\ncan be maintained, Myrdal estimates limited room for further interest\nrate hikes.<\/p>\n
However, BI is expected to maintain policy flexibility to respond\nquickly and measurably to changes in market conditions.<\/p>\n
On Tuesday, through the Weekly Board of Governors Meeting, BI decided\nto raise the BI-Rate by 25 basis points to the level of 5.5 per\ncent.<\/p>\n
BI had recently raised the BI-Rate by 50 bps at the Monthly Board of\nGovernors Meeting on 19-20 May 2026. BI is next scheduled to hold its\nMonthly Board of Governors Meeting on 17-18 June 2026.<\/p>\n
At the end of May 2026, foreign exchange reserves were recorded at\n144.9 billion US dollars, down 1.3 billion US dollars from the previous\nmonth, in line with government foreign debt payments and rupiah exchange\nrate stabilisation. In the last five months, foreign exchange reserves\nhave shrunk by 11.6 billion US dollars from a position of 156.5 billion\nUS dollars at the end of December 2025.<\/p>\n
The Jakarta Interbank Spot Dollar Rate (JISDOR) on Tuesday (9\/6)\nmoved stronger to the level of Rp18,141 per US dollar from the previous\nRp18,171 per US dollar on Monday (8\/6).<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/economist-bi-rate-hike-an-anticipatory-step-to-mitigate-external-risks-1781013750", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }