BI sees stable growth despite 100-basis-point rate hike

Jakarta (ANTARA) - Bank Indonesia (BI) Governor Perry Warjiyo has assured that Indonesia’s economic growth remains stable, supported by resilient domestic demand, despite a cumulative 100-basis-point increase in the benchmark interest rate during the first half of this year.

Speaking at an online press conference following the central bank’s Board of Governors Meeting on Thursday, Warjiyo maintained BI’s projection for Indonesia’s economic growth this year in the range of 4.9 percent to 5.7 percent.

His remarks came after the central bank raised its benchmark interest rate by 25 basis points to 5.75 percent, marking its third consecutive rate hike.

Bank Indonesia began the year with the benchmark rate at 4.75 percent before increasing it in May and early June. The latest hike was aimed at safeguarding the rupiah amid global geopolitical uncertainties and financial market volatility.

“Household consumption remains solid, supported by accelerated government spending and sustained consumer confidence,” Warjiyo said.

He explained that stronger government consumption was driven by the continued implementation of national priority programs and faster state budget disbursement, particularly the payment of the 13th-month salary for State Civil Apparatus (ASN) employees and the distribution of social assistance to Beneficiary Families (KPM).

Looking ahead, the governor said the government would continue optimizing various stimulus measures aimed at protecting household purchasing power and strengthening domestic demand as a key driver of economic growth.

Meanwhile, rising investment activity is reflected in Indonesia’s Purchasing Managers’ Index (PMI), which remains in expansionary territory, supported primarily by construction-related investments in public infrastructure projects.

“On the external front, exports must continue to be strengthened to capitalize on elevated global commodity prices amid slowing global economic growth prospects,” Warjiyo said.

He reaffirmed Bank Indonesia’s commitment to optimizing its policy mix to strengthen economic stability and support sustainable growth. The strategy includes maintaining accommodative macroprudential policies and strengthening payment system frameworks to support digital economic activity and financial inclusion.

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Translator: Uyu Septiyati Liman, Yashinta Difa

Editor: Primayanti

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