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Wider vote in parliament still needed to approve new term
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Financial commission's recommendation typically followed
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Warjiyo pledges to maintain stability in monetary policies
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Lawmakers urge c.bank to prepare for risks from US banking
woes
(Adds comments from governor, lawmakers)
By Stefanno Sulaiman
JAKARTA, March 20 (Reuters) - Indonesia's central bank
governor Perry Warjiyo secured on Monday 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. Full parliamentary approval is still needed for his
reappointment, 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 1.5% to 3.5% range
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 target 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, citing 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 told lawmakers BI's direct purchase of bonds from the government could only be done during a crisis and should be carried out in a "targeted, transparent and temporary" way.
BI bought 1,104.85 trillion rupiah ($71.86 billion) of
government bonds between 2020 and 2022 to help Indonesia fund
additional expenditure due to the COVID-19 pandemic.
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.
Eriko Sotarduga, a lawmaker from the Indonesian Democratic
Party of Struggle, said the financial commission backed Warjiyo
due to his experience handling the impact of crises such a the
U.S.- China trade war in 2018 and the pandemic.
"Because what we will face in the future is very difficult,
there has been a bank crisis in the U.S.," he told reporters,
referring to recent problems engulfing some U.S. banks.
Other lawmakers also urged Warjiyo to prepare for the risk
of U.S. banking woes impacting Indonesia's economy or the
rupiah.
($1 = 15,375.0000 rupiah)
(Reporting by Stefanno Sulaiman; Writing by Gayatri Suroyo
Editing by Kanupriya Kapoor, Ed Davies)
