In light of the ongoing volatility in the foreign exchange market, particularly regarding the nation's currency, the rupiah, Bank Indonesia has decided to maintain its key policy rates without changes. The decision was made public following a two-day meeting held by the central bank. The benchmark interest rate remains at 6.00%, the deposit facility rate is set at 5.25%, and the lending facility rate stands at 6.75%.
Bank Indonesia highlighted that the primary objective of its short-term monetary policy is to stabilize the rupiah exchange rate, especially against the backdrop of increasing uncertainty in global financial markets. In a statement, the central bank noted the earlier depreciation of the rupiah by approximately 7% against the US dollar at the start of 2024, although the currency has shown signs of recovery in recent weeks.
The central bank also reiterated its inflation target, aiming for a range of 2.5%, plus or minus 1%, on the consumer price index (CPI). This commitment underscores Bank Indonesia's dedication to fostering sustainable economic growth in Indonesia. Additionally, Bank Indonesia commented on the implementation of macroprudential policies that are designed to promote bank credit and financing directed at priority sectors for economic growth and job creation.
This includes support for Micro, Small, and Medium Enterprises (MSMEs) and initiatives within the green economy, all while upholding prudential norms. The outlook for Indonesia's economy appears optimistic, as Bank Indonesia projects a steady expansion path. The central bank has kept its growth forecast for 2024 within a range of 4.7% to 5.5%, with expectations of an uptick in this rate by 2025.
Finally, as part of its strategy to bolster economic progression, Bank Indonesia is enhancing its policy mix to work synergistically with the government's fiscal stimulus efforts. Notably, Indonesia faced an inflation peak of 5.95% year-on-year in September 2022 during the pandemic, but current trends show a significant cooling, with a recorded 1.84% inflation rate in September this year.
This development may allow Bank Indonesia room for potential monetary easing in forthcoming policy meetings..