Indonesia central bank governor vows to maintain stability until 2024

JAKARTA Indonesia's central bank governor Perry Warjiyo pledged on Monday to maintain a pro-stability monetary stance until 2024, as he laid out his vision for a second five-year term to a parliamentary committee that will consider his nomination.

The current term of Warjiyo ends in May and he needs to be confirmed by lawmakers after he was the sole candidate proposed by President Joko Widodo to head Bank Indonesia BI Warjiyo vowed to strengthen BI's policy mix to achieve its price stability goal and to support sustainable economic growth, giving a nod to a recently passed law that widened BI's mandate to include propping up growth.

This year and next year, we'll direct our monetary policy to guard stability, while other policies we'll direct to support economic growth, he said.

He said that BI would lower its inflation target to a range of 1.5 per cent to 3.5 per cent in the medium term, compared to the current target of 2 per cent to 4 per cent.

Inflation in Southeast Asia's largest economy has stayed above the target range as a result of high global commodity prices.

Warjiyo said that BI's interest rate hikes totalled 225 basis points between August and January were enough to guide inflation back to within target later this year.

He said that the stability of the rupiah exchange rate will be a priority and that there will be a lot of global uncertainties, such as the war in Ukraine and rate hikes in the United States.

In his presentation materials, Warjiyo showed an outlook for economic growth to go up to 4.9 per cent to 5.7 per cent in 2025 and 5.1 per cent to 5.9 per cent in 2028.

The 2023 economic growth outlook of BI was in the upper end of a 4.5 per cent to 5.3 per cent range.

During his address, the governor tried to sell his achievements in his current term, including overseeing BI's response to the U.S. Federal Reserve's previous tightening cycle and the Pandemic, including BI's bond buying operations.

Warjiyo, 64, is a career central banker. He has been credited with helping to maintain the Indonesian economy in the face of volatile markets in recent years, though some economists have criticised him for starting BI's recent rate hike cycle too late and ending it too soon.

Warjiyo needs to get approval from the full parliament to win a second term. The financial committee's recommendation is followed by legislators based on a so-called fit- and- proper test.