The holding of BI's benchmark interest rate at 6% is considered as BI's anticipation considering the Fed's interest rate which has not indicated a decline in the near future.

"We see that BI's efforts are still considering several external factors, including consumption price index (CPI) inflation and production price index (PPI) inflation in the US which are still high," said Acting Chairman of Kadin Indonesia, Yukki Nugrahawan Hanafi (20/3/2024).

Meanwhile, world oil prices are still above the US$80 level with the US$ 10-year Treasury yield rising to 4.3%. Moreover, there is still an economic slowdown in several of Indonesia's trading partner countries and the potential for rising commodity prices and global logistics due to geopolitical tension.

From the domestic side, Yukki assessed the policy as an effort to maintain the potential for a spike in inflation due to the momentum of rising prices of several basic necessities that drive inflation and anticipate the continued impact of El-Nino climate change.

Previously, BI Governor Perry Warjiyo said the decision to maintain the BI-Rate at 6.00% remains consistent with the focus of pro-stability monetary policy, which is to maintain Rupiah exchange rate stabilisation as well as pre-emptive and forward looking measures to ensure inflation remains under control within the target of 2.5±1% by 2024. As noted, BI has previously maintained its benchmark interest rate for 4 months since its last hike in October 2023 by 25 basis points.