JAKARTA (Reuters) – Indonesia’s central bank governor Perry Warjiyo said on Wednesday that monetary policy will remain pro-stability and that energy subsidies next year will allow Bank Indonesia (BI) to raise interest rates in a measured way.
This year, BI has lifted interest rates by a total of 175 basis points, raised banks’ required reserve levels and sold some bonds to tame inflation, which is currently running near its highest level in seven years.
Warjiyo said inflation expectations remain high and reiterated that BI will steer core inflation toward its target range of 2%-4% in the first half of 2023.
In 2024, he expected inflation to be within a range of 1.5%-3.5%.
Warjiyo said other central bank tools will be geared toward maintaining economic growth, which is seen between 4.5%-5.3% next year and between 4.7%-5.5% in 2024.
Warjiyo was speaking at BI’s annual gathering with bankers, government officials and other financial regulators.
(This story has been corrected to fix core inflation target to 2-4%, not 2-3%, in paragraph 3)
(Reporting by Stefanno Sulaiman, Gayatri Suroyo, Fransiska Nangoy and Ananda Teresia; Writing by Ed Davies; Editing by Kanupriya Kapoor)
