Indonesia raises benchmark interest rate to 5.75 percent

JAKARTA, (Xinhua) — Indonesia’s central bank, Bank Indonesia, announced an increase of 25 basis points in benchmark interest rate to 5.75 percent on Thursday in order to control inflation amid global economic fluctuation.

“Bank Indonesia believes that the increased interest rate will be sufficient to ensure that core inflation and the consumer price index will return to the target range of 2 to 4 percent in the first half of 2023,” said Governor of Bank Indonesia Perry Warjiyo at a press conference on Thursday.

Since August 2022, Bank Indonesia has raised interest rates by 225 basis points. According to Warjiyo, this has helped to reduce inflation faster than expected.

The consumer price index was 5.51 percent annually at the end of 2022, which was lower than the estimated 6.5 percent. Similarly, core inflation was 3.36 percent, lower than Bank Indonesia’s estimate of 4.61 percent.