Bank of Indonesia to release interest rate decision
The Bank of Indonesia will today release its interest rate decision for the current monthly period.
The rate has been set at 3.75% since December 2020, an all-time low since the bank began using the interest rate as its key policy tool in 2016. The current rate is in line with the bank’s monetary policy for the past year, aimed at supporting economic recovery from the COVID-19 pandemic and keeping inflation rates low. Last year, Indonesia reported a 2.1% GDP contraction, the first since 1998.
The Indonesian government has markedly raised its budget in 2021 from its 2020 edition, with 173.3 trillion rupiah now designated for healthcare spending as opposed to 63.5 trillion rupiah last year. This fiscal increase is also intended to bolster an ambitious national vaccination program unveiled at the start of the year, aiming to immunise 180 million people throughout the country. Although the Indonesian deficit is projected to swell to 6.3% of total GDP, the Bank of Indonesia will likely slash the interest rate again to a target of 3.5% this month. Jakarta would like to raise consumer spending to spur a lagging economy, and the additional funding will largely be used to purchase vaccines and provide unemployment relief for the population.
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