BI Says Monetary Expansion Drives Stability and Economic Growth

Bank Indonesia (BI) has recorded a rise in broad money in line with the authorities’ expansion of monetary liquidity aimed at preserving stability while supporting national economic activity. BI Governor Perry Warjiyo said liquidity growth was reflected in the increase in the monetary base, or M0, which reached 14.1% year-on-year in April 2026, up from 11.8% in the previous month. He added that the rise was mainly driven by a year-on-year 28.4% increase in current account deposits of commercial banks at BI, together with a 14.6% rise in currency in circulation. ‘The M0 growth in April 2026 was largely influenced by more expansionary monetary operations and the rising liquidity needs of banks for dividend payments,’ Perry said at a press conference after the BI Board of Governors meeting on Wednesday, 20 May. He explained that the higher liquidity needs during the dividend-distribution period pushed greater funding demand in the financial system, prompting BI to take expansionary steps to ensure liquidity adequacy is maintained. In addition to base money, BI noted further growth in broad money (M2). In March 2026, M2 grew by 9.7% year-on-year, higher than February’s 8.7%. Perry said M2 growth was mainly driven by higher net claims on the Central Government and continued disbursement of bank credit. He said the conditions show that banking intermediation remains functioning and domestic liquidity continues to support economic activity. However, Perry stressed that BI will continue to balance liquidity needs with macroeconomic stability to ensure that higher money supply does not trigger inflationary pressures. ‘Going forward, money supply growth will continue to be managed to remain consistent with stability and to support growth through the policy synergy between Bank Indonesia and the government,’ he added.