BI Rate Reduction Boosts Economic Growth

"Economic growth in 2016 is expected to be higher, in the range of 5.2 to 5.6 percent year-on-year (yoy),” Mr. Segara said in Jakarta, Tuesday (2/23).

 

According to him, Indonesia's economic growth momentum that started to happen since the third quarter of 2015 continued into the fourth quarter of 2015 and was partly driven by government spending. Economic growth in the fourth quarter of 2015 was recorded at 5.04 percent (yoy), higher than the previous quarter at 4.74 percent (yoy).

 

"The increase in economic growth in the fourth quarter of 2015 was partly driven by the government's role, both in the form of government consumption and investment in infrastructure, as well as the holding of the simultaneous election," he said.

 

Previously, the Board of Governors (RDG) of Bank Indonesia on February 17—18,  2016 decided to lower the BI Rate by 25 basis points (bps) to 7 percent, with Deposit Facility interest rate reduced to 5 percent and Lending Facility to 7.5 percent.

 

Bank Indonesia also decided to lower Primary GWM by 1 percent, from 7.50 percent to 6.5 percent, effective from March 16, 2016.

 

He added that the decision was in line with the easing space of monetary policy which was increasingly open with the progressive macroeconomic stability, especially a decrease in inflationary pressure in 2016, as well as the easing of uncertainty in global financial markets.

 

"Bank Indonesia will continue to strengthen coordination with the Government to ensure the  inflation control, the strengthening of growth stimulus, and the well-managed structural reform to support sustainable economic growth while maintaining macroeconomic stability," he concluded. (Translator: Erik Limantara, Photo: BI Office)