Bank Indonesia Maintains Interest Rate at 6%

Bank Indonesia (BI) has decided to maintain its key interest rate at 6% for the third consecutive month to stabilize the rupiah, which recently fell below the significant level of Rp 16,000 per dollar. This decision coincided with a period of global uncertainty and a strong US dollar that is exerting pressure on various currencies, including the rupiah. While some analysts had anticipated a potential rate cut, the majority predicted BI would hold rates steady, reflecting concerns over currency weakness despite low inflation and softening domestic growth. Governor Perry Warjiyo emphasized the need to strengthen the exchange rate amid expectations that global inflation may remain high due to supply chain disruptions. The Federal Reserve's anticipated rate cut in the U.S. may also influence BI's future decisions, but for now, the focus remains on currency stability. Overall, the central bank's actions are a cautious response to both domestic and international economic dynamics.