JAKARTA (TheInsiderStories)–Bank Indonesia’s newly appointed Governor Perry Warjiyo will prioritize the stability through monetary policy but will seek ways to support growth.
Perry Warjiyo officially inaugurated as BI governor on May 24, 2018, and will lead until 2023, replacing former governor Agus Martowardojo. Prior to serving as deputy governor, Warjiyo was the assistant to the governor for monetary policy and macro-prudential and international affairs.
In his first comment after inaugurated, Warjiyo said he will prioritize on stability but will seek ways to support growth. In the current condition when rupiah has depreciated more than 4 per cent against US Dollar since the early 2018 and entered the deepest depreciation among peers in Southeast Asia, it is difficult for Bank Indonesia to seek ways to boost economic growth.
In the pro-stability, Warjiyo pledged to be more responsive and advance about interest rate policymaking. “We plan on being pre-emptive, we will implement a front-loading policy and be ahead of the curve in our policies,” he said.
This commitment is important over criticism of last interest rate hike that called too late and has little impact on the rupiah. Bank Indonesia raised the 7-day Repo Rate reference by 25 basis points to 4.25 per cent to 4.5 per cent on May 18, 2018. But the policy has no power to strengthen rupiah.
Rupiah weakened 67 points or 0.47 per cent at Rp14.209 against US Dollar yesterday, the lowest level since October 2015.
In addition, Bank Indonesia will continue intervening in bond and FX market. Until now, Perry said Bank Indonesia has bought almost Rp50 trillion of government bonds since early this year and spent Rp13 trillion this year.
Furthermore, Warjiyo will continue to coordinate with the government and Financial Service Authority to jointly stabilize rupiah exchange rate. Lastly, Bank Indonesia plans to meet banks and investors in the near future to convince about Indonesia’s economic condition.
In the pro-growth policy, Warjiyo has four instruments to boost economic growth namely macro-prudential policy relaxation, especially to support the housing sector. Next is financial market deepening due to its potential to fund infrastructure projects. The third is the payment system to support the national strategy as well as the digital economy and lastly, boosting the sharia economy.