REPUBLIKA.CO.ID, JAKARTA -- The Chairman of the Indonesian Chamber of Commerce and Industry (Kadin), Rosan P. Roeslani, believes Bank Indonesia (BI) will again raise its 7 Days Reverse Repo Rate (7DRRR). He predicted it will happened in the next few months.

"It is likely to increase again. All sides have encouraged an increase in the benchmark interest rate. It will be raised to 5 per cent soon and then to 5.25 per cent," he said at a public discussion held at the Indonesia Stock Exchange (BEI) here on Tuesday.

On May 30, BI raised the key rate by another 25 basis points to 4.75 per cent at the extraordinary meeting of the board of governors held to anticipate external risks, particularly the expected second hike in the Fed rate on June 13, 2018. In mid-May, BI had raised the key rate by 25 basis points to 4.5 per cent.

Also read: DPR wants effective policies other than rising interest rate

Rosan said the key rate hike might increase production cost but businessmen had planned for it. "That's okay as long as stability can be maintained. The fluctuation of the key rate is not drastic for us. That's why we can anticipate (the problem) and find solutions to it," he said.

The Kadin chief lauded the central bank's monetary policy, but said it should be accompanied by a fiscal policy. "It is good for BI to raise its key rate but it is temporary in nature. We need a fiscal policy to build a strong and sound industry. That is the key to achieving strong and optimal economic growth," he said.

Earlier, the Bank Indonesia Governor, Perry Warjiyo said the pressures on stability, particularly of the Rupiah exchange rate, tend to originate from policy change in the United States. It affected all countries.

A higher expectation of policy rate hike in the US is also attributed to the fiscal deficit, which is predicted to reach around 4 per cent of GDP this year and 5 per cent of GDP in 2019.

"The economic gains and rising inflation in the United States are placing added pressure on the Federal Reserve to hike the Federal Funds Rate (FFR), with some market players expecting aggressive hikes up to four times this year," said Warjiyo, on Thursday (May 31).

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