Indonesia central bank governor gets approval for new term from parliament body

INDONESIA’S central bank governor Perry Warjiyo secured on Monday (Mar 20) approval from a key parliamentary body for his reappointment for a second term, after pledging to maintain a “pro-stability” monetary stance until 2024.

Warjiyo’s five-year term as Bank Indonesia (BI) chief ends in May and he still needs full parliamentary approval to be reappointed, though lawmakers typically follow the financial committee’s recommendation based on a so-called “fit-and-proper test”.

Earlier on Monday, Warjiyo vowed to strengthen BI’s policy mix to achieve its price stability goal as well as supporting 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 will direct our monetary policy to guard stability, while other policies ... we will direct to support economic growth,” he said.

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

Inflation in South-east Asia’s largest economy has stayed above the target range since last year amid high global commodity prices.

Warjiyo repeated that BI’s interest rate hikes totalling 225 basis points between August to January were sufficient to guide inflation back to within target later this year.

“We will focus a lot on the stability of the rupiah exchange rate,” he said, noting global uncertainties such as the war in Ukraine and rate hikes in the United States.

In his presentation materials, Warjiyo displayed an outlook for economic growth to accelerate to a range of 4.9 per cent to 5.7 per cent in 2025 and 5.1 per cent to 5.9 per cent in 2028.

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

During his address, the governor sought to sell his achievements in his current term, including overseeing BI’s response to the US 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 a strong 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. REUTERS