Consistent with the direction of monetary policy, Bank Indonesia has raised the BI7DRR rate by 175bps from August-November 2022 to 5.25% as a front loaded, pre-emptive and forward looking measure to rein in overshooting inflation expectations and to ensure core inflation returns to the 3±1% target earlier in the first semester of 2023.
They will become more able and willing to compete for new business – in effect, allowing low market interest rates to pass through to more borrowers. These developments will induce more borrowing and spending, further improving the economy, but this process will take time.