"BI must observe all measures taken by the Fed. If the Fed raises interest rates, we must maintain the stability of the rupiah," Bappenas) Head Bambang P.S. Brodjonegoro said.Jakarta (ANTARA News) - National Development Planning Board (Bappenas) Head Bambang P.S. Brodjonegoro said Bank Indonesia (BI) should be concerned about potential measures being considered by the US Federal Reserve (Fed) in raising its interest rates.
The Fed raised its benchmark interest rate by 25 basis points from 0.25-0.5 percent to 0.5-0.75 percent. Their latest projection on the economy and interest rates indicates that three interest rate hikes are expected in 2017.
"BI must observe all measures taken by the Fed. If the Fed raises interest rates, we must maintain the stability of the rupiah," Bambang stated here on Friday.
He pointed out that BI needs to maintain the countrys monetary stability, especially in terms of the rupiahs exchange rate, to reassure the business community.
The rupiahs exchange rate weakened after the announcement of the Feds benchmark interest rate, he noted, adding that the weakening of the rupiah would continue because the government has continued to maintain the countrys current economic practices.
"I think the most important effort is to safeguard the macro fundamentals to anticipate pressure on the rupiah," he remarked.
The BI Board of Governors earlier agreed on Dec 14-15 to hold the BI 7-Day (Reverse) Repo Rate at 4.75 percent, while maintaining the Deposit Facility and Lending Facility rates at 4 percent and 5.50 percent respectively, effective Dec 16.
The policy is consistent with efforts to optimize the domestic economic recovery while maintaining macroeconomic stability, against a backdrop of uncertainty in global financial markets.
According to Bambang, BI believes that the previous monetary and macroprudential policy easing will continue to boost the momentum of domestic growth.(*)
Editor: Heru Purwanto
Copyright © ANTARA 2016
