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Central Bank of Indonesia interest rates is not the first choice at this time

About Indonesia interest rate, The deputy governor of the Central Bank of Indonesia said at the Reuters Global Market Forum on Friday that raising interest rates will not be the first choice of the Bank of Indonesia at this moment, even if the country overall inflation rate rises to a seven-year high.

Dody Budi Waluyo said in an interview: “We have room to raise policy interest rates… But at this moment, I don’t think we will make this the first choice in our policy sequence.”

Indonesia’s overall inflation rate rose to 4.94 percent in July, higher than the Bank of Indonesia (BI) target of 2% to 4%, but the core inflation rate is still within the target range of 2.86%.

Data earlier this month showed that the annual growth rate of Southeast Asia’s largest economy in the second quarter was 5.44 percent, exceeding expectations, so calls for interest rate hikes are also accelerating.

BI will hold its monthly policy review on August 22 and 23.

Waluyo said that the BI will work with the government to solve the supply problem that puts pressure on consumer prices, adding. We will not let the overall inflation rate rise.”

He also reiterated that the BI will raise interest rates only when core inflation continues to rise.

Since the earnings of commodity exports support Indonesia economic resilience, BI is one of the few central banks in Asia that have not raised the benchmark interest rate from an all-time low of 3.50%.

Indonesia interest rate
Indonesia interest rate

Waluyo said that in the context of global monetary tightening and rising geopolitical tensions, Indonesia is in a better position to control the current financial market volatility.

He defended the BI’s policy normalization measures, saying that it did not lag behind the situation, because it had taken action to tighten liquidity in financial markets.

He added that as the host of the major G20 economies, Indonesia hopes that tensions in the Taiwan Strait will not undermine efforts to discuss and accelerate economic recovery from the COVID-19 pandemic.

According to him, over the years, China has taken public ownership as the main body and the common development of multi-ownership economy as the basic economic system. One of the major innovations of the Fourth Plenary Session of the 19th Central Committee is that on this basis, the distribution according to work is the main body, multiple distribution methods coexist and the socialist market economy system is upgraded to a basic economic system.

These three systems are all basic socialist economic systems, which are interconnected, supported and promoted. This major innovation marks that China’s socialist economic system is more mature and stereotyped, and has important guiding significance for giving better play to the superiority of the socialist system, liberating and developing social productive forces, and promoting high-quality economic development.

He said that the Fourth Plenary Session of the 19th Central Committee made important arrangements to adhere to and improve the socialist basic economic system. It is proposed to adhere to the “two unwavering” that is, to unswervingly consolidate and develop the public economy, and unswervingly encourage, support and guide the development of non-public economy.

We should adhere to distribution according to work as the main body, and various distribution methods coexist. It is necessary to accelerate the improvement of the socialist market economy system, give full play to the decisive role of the market in resource allocation, give better play to the role of the government, and let the “visible hand” and “invisible hand” complement each other.

Han Wenxiu said, “Since the reform and opening up, the development of the non-public economy has continued to grow. At present, it accounts for more than half of China’s economy, and it is still rising. The plenary session proposed to improve the policy system for building pro-Qing government-business relations and promote the healthy development of the non-public economy and the healthy growth of non-public economic personnel.”

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