JAKARTA – Board of Governors Meeting (RDG) of Bank Indonesia (BI) has opted to maintain its benchmark interest rate at 6.00% today (20/11).

According to the press release, the decision is mean to reinforce monetary policy that aims to control inflation, which is targeted at around 2.5% in both 2024 and 2025.

“The focus of monetary policy is to strengthen Rupiah stability against the backdrop of escalating geopolitical and global economic uncertainties, particularly stemming from political developments in the United States,” said Ramdan Denny Prakoso, Executive Director and Head of the Communications Department of BI.

However, the Rupiah has struggled, depreciating by 0.84% as of November 19, 2024. BI attributes this to a broad-based strengthening of the US Dollar.

This trend is likely to persist given the US government’s adoption of expansive fiscal policies and inward-looking economic strategies under the Trump administration.

The trend has also been driven by global investors reallocating portfolios back to US assets, increasing pressure on currencies globally and intensifying capital outflows from Emerging Markets (EM), including Indonesia.

On the domestic front, BI emphasized that its macroprudential and payment system policies are being tailored to support sustainable economic growth.

“Accommodative macroprudential measures remain in place to encourage bank lending and financing to priority sectors, such as MSMEs and green economy initiatives, which are vital for driving growth and job creation,” Prakoso added. (ZH)