Bank Indonesia Governor Destry Damayanti said the central bank does not rule out adjusting the BI Rate if needed, as the rupiah weakened near 18,200 per US dollar during the week. She made the remarks to reporters in Jakarta on Thursday, 29 October.
The central bank kept the BI Rate at 5.75 percent at its Board of Governors meeting on 20-21 October, but raised the deposit facility rate to 5 percent from its previous level. The decision was attributed to rising external pressure, notably escalating geopolitical tensions in the Middle East and the expectation that US monetary policy will remain tight for longer.
Other tools in reserve
Damayanti said the central bank has other instruments at its disposal. She cited hedging cost incentives, macroprudential policy and the Sekuritas Rupiah Bank Indonesia (SRBI), a central bank security.
The SRBI rate could be raised to attract foreign capital, depending on market conditions, according to the context provided by the central bank’s recent statements.
A policy with many levers
Damayanti said the bank was watching developments closely. “Everyone looks at market conditions, we will see later how it goes.”
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She added that the interest rate is not the only tool the bank uses. “It is not only the interest rate that is our policy.”
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Source: Bank Indonesia
