Indonesia Central Bank Governor Pledges Pro-stability Policies If Reappointed

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.

Warjiyo's current term ends in May and he needs to be confirmed by lawmakers after he became 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 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% to 3.5% in the medium term, compared with the current target of 2% to 4%, he said.

Inflation in Southeast 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% to 5.7% in 2025 and 5.1% to 5.9% in 2028.

BI's 2023 economic growth outlook was in the upper end of a 4.5% to 5.3% range.

During his address, the governor sought 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 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.

Warjiyo needs approval from the full parliament to secure a second term. Lawmakers typically follow the financial committee's recommendation based on a so-called "fit-and-proper test".