Bank Indonesia considers 'higher for longer' conditions in policy formulation

Bank Indonesia (BI) Governor Destry Damayanti has ensured that the central bank continues to account for the ‘higher for longer’ situation, including high global bond yields, when formulating domestic policies.

Based on the central bank’s latest assessment, Destry acknowledged the persistence of ‘higher for longer’ conditions, including high bond yields, inflation, and interest rates in advanced economies.

“This is something we will certainly anticipate when making domestic policies. Therefore, global factors will significantly influence many of our backgrounds in formulating domestic policy. We will continue to pay attention to that,” Destry stated during a press conference at the Supreme Court Building in Jakarta on Wednesday.

Furthermore, Destry emphasised that the central bank’s current policy stance remains focused on stability. She asserted that if Indonesia maintains a stable economy, the opportunities for economic growth will expand.

In this regard, BI will continue to balance monetary, macroprudently, and payment system policies. Additionally, other policies will relate to MSMEs, the Islamic financial economy, and the deepening of financial markets.

“In those policies, we will certainly balance which will be more pro-stability and which will be more pro-growth,” said Destry.

Regarding pro-growth policies, she cited how the central bank has provided Macroprudential Liquidity Incentive Policies (KLM) to banks to encourage credit distribution to priority sectors.

“So, the combination, or what we call the policy mix, will remain our tool in formulating policy,” said Destry.

Destry Damayanti was officially inaugurated as the Governor of Bank Indonesia for the 2026-2031 period, after taking her oath of office before the Chief Justice of the Supreme Court, Sunarto, in Jakarta on Wednesday.

On the same occasion, Aida S. Budiman also took her oath as Senior Deputy Governor of BI, and Solikin M. Juhro as Deputy Governor of BI.

The inauguration was established based on the Decree of the President of the Republic of Indonesia Number 92/P Year 2026, dated 1 September 2026, regarding the Dismissal and Appointment of the Board of Governors of Bank Indonesia.