JAKARTA (Reuters) – Bank Indonesia Governor Perry Warjiyo said on Thursday that a law passed last year to expand the mandate of Bank Indonesia (BI) would not affect its framework for tackling inflation.
Parliament passed a bill in December that expanded BI’s remit to include maintaining financial system stability to support sustainable Sustained economic growth, including containing inflation.
Despite repeated promises by government officials that the central bank will remain independent, there are concerns that the new law could undermine BI’s autonomy.
“We have been doing this all the time. Now we are grateful that the new law recognizes this legally,” Warjiyo said, referring to maintaining the financial and payment system through macroprudential and digital payment policies Steady effort.
“We are still working on the inflation targeting framework,” he said.
Warjiyo made his first comments on BI’s broader mandate at the bank’s annual investment forum.
BI’s decision on its policy mix will continue to take into account many aspects including economic growth, Warjiyo added, what the central bank has done since 2022.
Before the law is passed, BI usually sets the annual inflation target range and decides to adopt a mix of policies to meet the target while maintaining financial system stability.
BI has raised its benchmark interest rate by a total of 225 basis points since August to rein in inflation, which has been running above its target range.
Warjiyo reiterated that barring any unforeseen circumstances, rate hikes would be sufficient to guide inflation back within the 2% to 4% target range in the second half of the year 2023. December inflation was 5.%.
BI vs. 225 GDP growth outlook of 4.5 The midpoint of the rate came in at 5.3%, below the 2022 growth forecast of 5.1% to 5.2%, he said, in line with previous forecasts.