Unexpectedly raises policy rate to 6.25% amid falling rupiah
Bank Indonesia (BI) raised the BI rate by 25 basis points (bps) to 6.25% during its fourth Board of Governor meeting this year. This marks the first rate hike for the year, defying broad expectations for a hold
- The Deposit Facility and Lending Facility rates were also increased to 5.50% and 7.0%, respectively.
- BI statement: According to BI, "to strengthen the stability of the rupiah exchange rate from the impact of worsening global risks" and it also reiterated that the decision acts "as a pre-emptive and forward-looking step to ensure inflation remains within the target of 1.5% - 3.5% in 2024 and 2025 in line with the pro-stability monetary policy stance". At the same time, BI keep its loose macroprudential policies to boost bank lending for businesses and households despite higher interest rates.
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