Governor of Bank Indonesia (BI), Perry Warjiyo, said that the room for reducing the benchmark interest rate or BI-7 Day Reverse Repo Rate (BI7DRR) is very limited.

BI decided to cut the benchmark interest rate to the lowest level of 3.5 percent at the Board of Governors Meeting last week.

"We say of course that now BI has been very aggressive in lowering the BI interest rate to 3.5 percent. With an inflation target of 3 percent, our room for lowering interest rates will be more limited, "he said on Thursday (25/2).

Perry said that the increasingly limited space for lowering the benchmark interest rate does not mean that BI's monetary policy does not support economic recovery.

"As a developing country, BI still needs to maintain the difference in interest rates at home and abroad. This is because developing countries still need funding from abroad, that is also a basis for consideration and that is what we are doing at BI, "he explained.

Furthermore, currently Bi and the Financial Services Authority (OJK) are still encouraging the transmission of lowering the benchmark interest rate to bank credit interest rates, in line with the very high difference (spread) of bank loan interest rates against reference interest rates, which is 6, 36 percent.

"Apart from the low-interest rate policy, the central bank will also encourage economic recovery through the quantity route or quantitative easing, and BI will also finance the state budget," he said.