BI sets BI7DRR benchmark interest rate at 3.5 percent but lowers global economic forecast, JAKARTA — The results of the meeting of the Board of Governors of Bank Indonesia (RDG) on July 20-21, 2022 stipulates that the reference rate for the BI-7 Day Reverse Repo Rate (BI7DRR) will be kept at the level of 3.5 percent . This result is consistent with Bank Indonesia’s belief that core inflation will be sustained and will keep future inflation expectations in mind.

In line with the decision to maintain the BI7DRR benchmark interest rate, Bank Indonesia (BI) lowered the forecast figure for global economic growth to 2.5 percent for the period 2022 from a previous 3.5 percent.

Bank Indonesia Governor Perry Warjiyo said the decline in forecast is consistent with the increasing risk of stagflation and uncertainty in global financial markets.

Accordingly, global inflation continues to rise amid supply chain disruptions and ongoing geopolitical tensions between Russia and Ukraine, as well as protectionist policies, particularly on food.

The economies of a number of countries, the United States (US), China, Japan, Europe and India, are estimated to grow more slowly than previously thought.

The US economy is also on the brink of recession, in line with the response and tightening of monetary policy and more aggressive rate hikes in the country.

“This means that global growth is expected to be lower than the previous forecast of 3.5 percent to 2.5 percent,” he said in a virtual press conference on Thursday (July 21, 2022).

Perry believes that uncertainty in global financial markets will remain high, resulting in limited foreign capital inflows to emerging and developing countries, including Indonesia.

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