BI monetary policy in 2022 to focus on stability: official

BI monetary policy in 2022 to focus on stability: official

A screenshot of Bank Indonesia (BI) senior deputy governor Destry Damayanti during an online discussion originating from Jakarta on Thursday (July 29, 2021). (ANTARA/Agatha Olivia)

Jakarta (ANTARA) - Bank Indonesia (BI) will direct its monetary policy in 2022 towards maintaining stability after all central bank policy instruments are deployed to encourage national economic recovery, senior deputy governor Destry Damayanti has said.

"Meanwhile, macroprudential policies or the payment system in 2022 will still be pursued accommodatively for economic growth," Damayanti said at an online discussion originating from here on Thursday.

The monetary policy will include efforts to stabilize the rupiah exchange rate through a triple intervention, including in the spot market, Domestic Non Deliverable Forward (DNDF) transactions, and the purchase of Government Securities (SBN) in the secondary market, she informed.

Such efforts are needed to prevent the impact of tapering off or reducing the purchase of assets of the US Central Bank, the Fed, which may be carried out in early 2022, she explained.

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urthermore, a monetary policy focused on stability will involve low interest rates and loose liquidity until the initial indications of a permanent increase in inflation emerge, Damayanti said.

"We will continue to maintain this low interest rate even though several countries in Latin America and Russia have started to raise their interest rates. Fundamentally, the conditions in some of these countries are indeed different from Indonesia," she noted.

Through changes in BI's monetary policy, which may only occur in early 2022, liquidity reduction will be carried out before increasing the benchmark interest rate, she said.

Stability will be supported through strengthening policy synergies, especially with the government, as well as the Financial System Stability Committee (KSSK), she added.

However, macroprudential policies will still be pursued accommodatively in 2022, which will include efforts to continue loose macroprudential policies, such as the Macroprudential Intermediation Ratio (RIM) and Loan to Value (LTV), to encourage credit and economic growth, as well as continue to innovate on loose macroprudential policies to encourage priority sectors and MSMEs, Damayanti said.

The payment system digitization policy will also be pursued to continue to support national economic growth through accelerating the digitization of the payment system through the Indonesian Payment System Blueprint, developing FPMI infrastructure and payment system operations, as well as industrial efficiency and competitiveness, including pricing policy, she added.

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