Economists explain that the impact of increasing BI interest rates will increase KPR interest installments. FOTO/doc.SINDOnews
JAKARTA – Bank Indonesia (BI) officially raised mold interest rate by 25 basis points (bps) to the level of 6.25%. Economist and Director of the Center of Economics and Law Studies (Celios) Bhima Yudhistira also spoke out.
According to him, BI’s move to increase the benchmark interest rate is only a paracetamol medicine to reduce the short-term weakening of the Rupiah. Bhima said these steps were not enough to prevent the Rupiah from weakening.
“The increase in interest rates is just paracetamol to reduce the short-term weakening of the rupiah. Yes, if you want to continue using the interest rate, never mind 25 bps, even 50 bps is not enough to prevent the weakening of the rupiah,” he said in his statement, Thursday (25/4/2024).
Furthermore, Bhima is of the opinion that the effect of increasing the benchmark interest rate only makes people more burdened. This is because most people usually purchase houses and motor vehicles using credit facilities.
“The increase in the reference interest also causes other consumer loans to experience a slowdown. Interest in Indonesia is already high, plus the increase in the BI reference interest is even higher,” said Bhima.
“The portion of public income allocated to pay credit installments could increase and reduce the allocation for purchasing other goods,” he said.
For your information, BI’s move to increase the benchmark interest rate by 25 basis points (bps) to 6.25% is due to the change in the direction of the Fed’s interest rate reduction and increasing political tensions in the Middle East.
“The baseline scenario is above 75%. The Fed Fund Rate will fall once by 25 bps in the fourth quarter, which is likely in December 2024,” said Perry at the BI RDG press conference in April 2024.
The next estimate is that the US benchmark interest rate will fall by 50 bps in the first quarter or second quarter of 2025. However, this could change according to the risks faced in the future. Perry explained another scenario, the Fed’s interest rates will remain high for longer in 2024 and only fall 25 bps in 2025.
“That’s about the probability of what we are doing to mitigate the potential risk so that it returns to baseline,” he explained.
