Interest Rate in Indonesia
Indonesia - Interest Rate
Bank Indonesia hikes rates again in September to bolster the currency
At its 26–27 September monetary policy meeting, Bank Indonesia (BI) raised the seven-day reverse repo rate by 25 basis points to 5.75%. The decision was broadly in line with market expectations and marked the fifth rate hike so far in 2018. In addition, the Bank increased the deposit facility rate and lending facility rate by 25 basis points each to 5.00% and 6.50%, respectively. The Bank also announced new hedging arrangements for firms and promised to continue working closely with the government to strengthen the external sector.
The Bank’s tighter monetary stance—coupled with the new hedging arrangements—aims to support the rupiah, which has lost nearly 11% of its value against the U.S. dollar so far this year. Rupiah weakness is being driven by Indonesia’s widening current account deficit and a broader pull-out from emerging markets. The Bank’s move came soon after the Federal Reserve increased its policy rate by 25 basis points and should help maintain the relative attractiveness of Indonesia’s financial markets. Internally, domestic price pressures remain moderate, pinned down by government price controls on electricity and fuel. Inflation has remained comfortably within the Bank’s target range of 2.5%–4.5% in recent months.
Looking ahead, Governor Perry Warjiyo struck a hawkish tone in a press release following the policy meeting, while Bank officials have repeatedly promised to continue taking pre-emptive action to ensure financial stability. With the U.S. Federal Reserve set to raise the target range for the federal funds rate several times over the next 12 months, Bank Indonesia is likely to tighten monetary policy further going forward to protect the currency.
The next monetary policy meeting will be held on 22–23 October.
Indonesia Interest Rate Forecast
Last month, Met the why particular Consensus Forecast panelists expected the reverse repo rate to end 2018 at 5.76% and 2019 at 5.95%. Our panelists are currently taking the Bank’s latest move into account, with a new Forecast to be published on 16 October.
Indonesia - Interest Rate Data
|Policy Interest Rate (%)||7.50||7.75||7.50||4.75||4.25|
5 years of economic forecasts for more than 30 economic indicators.
Indonesia Interest Rate Chart
Source: Bank Indonesia.
|Bond Yield||8.85||-0.05 %||Oct 16|
|Exchange Rate||15,200||0.05 %||Oct 16|
|Stock Market||5,801||-0.32 %||Oct 16|
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October 15, 2018
According to Statistics Indonesia, the country recorded a trade surplus of USD 0.2 billion in September, down from the USD 1.8 billion surplus registered in the same month last year.
October 11, 2018
In August, retail sales grew 6.1% over the same month last year, up markedly from July’s 2.9% expansion and markedly beating the Bank’s initial estimate of 2.8%.
October 1, 2018
Consumer prices fell 0.18% from the previous month in September, following August’s 0.05% decrease.
October 1, 2018
Conditions in Indonesia’s manufacturing sector improved at a slower pace in September, according to the Purchasing Managers’ Index (PMI) released by IHS Markit and Nikkei, with the PMI decreasing from 51.9 in August to 50.7.
September 28, 2018
At its 26–27 September monetary policy meeting, Bank Indonesia (BI) raised the seven-day reverse repo rate by 25 basis points to 5.75%.