Bank Indonesia (BI) decided to maintain the benchmark interest rate or 7 Days Reverse Repo Rate (7DRR) at 3.5% in the policy rate meeting today.

The deposit facility and lending facility rates remained at 2.75% and 4.25%, respectively.

"Bank Indonesia Board of Governors Meeting on March 17-18, 2021 decided to maintain the BI 7DRR at 3.5%," BI Governor Perry Warjiyo said at a virtual press conference on Thursday (18/3).

The decision to hold the benchmark interest rate this month, according to Perry, takes into account global and national economic and financial conditions.

"Globally, the rate of economic growth has the potential to be higher, especially in countries that are able to accelerate the covid-19 vaccination and provide a large fiscal stimulus. The projection is that the global economy will be higher than the initial assumption of 5.1%," BI Governor Perry explained.

The economy of the United States, China, and India will support the improvement. For one thing, the approval of the US fiscal stimulus reached US$ 1.9 trillion from Joe Biden.

"In line with this recovery, trade volume and commodity prices will also continue to increase, thus supporting the export performance of developing countries, including Indonesia," said Perry.

This has contributed to increased yield on US debt securities and the US Treasury and gave sentiment to financial markets.

"Although the Fed is not expected to change its monetary policy. This will restrain the flow of foreign capital to developing countries, including Indonesia," said Perry.

Meanwhile, at the national level, human mobility is still limited, but export performance improves in line with the increase in demand from partner countries. The increase in export performance occurred in Sulawesi, Maluku, Papua, Java, and Sumatra.

Also, the PMI has increased, and the covid-19 vaccination program has been running continuously to encourage domestic economic recovery.

The national central bank views that Indonesia's economic recovery will continue in line with various fiscal stimuli from the government, one of which is the relaxation of the sales tax on luxury goods (PPnBM). Then, there is also relaxation of down payments (DP) to purchase houses and motorized vehicles.
"With these developments, the Indonesian economy is estimated to be in the range of 4.3% to 5.3%," he said.