BI RATE

BI Rate is the interest rate policies that reflect the attitude or stance of monetary policy set by the Bank Indonesia and announced to the public. BI Rate announced by Bank Indonesia Board of Governors of each monthly meeting of the Board of Governors and implemented on monetary operations conducted by Bank Indonesia through the management of liquidity (liquidity management) in the money market to achieve the operational target of monetary policy.

Operational target of monetary policy is reflected in the growth rate Interbank Money Market Overnight (Interbank O / N). Movements in interbank rates is expected to be followed by growth in deposit rates, and in turn lending rates. Taking also into account other factors in the economy, Bank Indonesia will generally raise the BI Rate expected if inflation exceeds the target set, whereas Bank Indonesia will lower the BI Rate when inflation is estimated to be below the target set.

BI Rate Determination :

• Determination of the response (stance) monetary policy is conducted every month through the mechanism of Monthly Meeting with monthly coverage of the material.

• The response of monetary policy (BI Rate) shall be valid until the next Meeting

• Determination of the monetary policy response (BI Rate) is done by considering the effects of

monetary policy delay (lag of monetary policy) in influencing inflation.

• In case of any development beyond the original forecasts, setting monetary policy stance can

be done before the Monthly Meeting with RDG Weekly.

Large BI Rate Changes :

Monetary policy response is expressed in changes in the BI Rate (in a consistent and gradual in multiples of 25 basis points (bps). In Bank Indonesia to show the intentions of the greater of the inflation target, then the changes can be done in the BI Rate 25 bps more than in multiples of 25 bps.

Conclusion:

BI Rate, is more widely used as an indication of the policy and guidance on the steps of Bank Indonesia in promoting economic growth or inflation on account of their growth.
Thus, the BI Rate is the rate of consumer interest rates, because every bank in Indonesia using the BI Rate in setting interest rates such as interest rate consumer loans, housing loans (mortgages) and others. However, the interest rate specified in the BI Rate is the maximum rate, meaning BI Rate must be greater than the interest rate set by each bank in Indonesia.
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