The latest Consumer Confidence Survey released by Indonesia’s central bank indicated that Indonesian consumers were more optimistic in January 2015 (compared to the previous month) on the back of recent fuel price cuts. The index, based on a total of 4,600 households across 18 major Indonesian cities, climbed to 120.2 points in January, up from 116.5 in the preceding month (a score above 100 signals consumer optimism). In December the index had declined due to higher administered fuel prices.

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Inflation in Indonesia is expected to have eased to 7.50 percent year-on-year (y/y) in January 2015 on the back of cheaper domestic fuel prices (triggered by sliding global oil prices). The month-on-month pace (m/m) in the first month of 2015 may have tumbled to near zero percent from 2.46 percent (m/m) in December 2014. Last year, Indonesian inflation had accelerated to 8.36 percent (y/y) primarily due to the implementation of higher prices for government administered low-octane gasoline and diesel in November 2014.

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The Indonesian government, central bank (Bank Indonesia) and Commission XI of the House of Representatives (DPR) agreed to revise several macroeconomic targets in the Revised 2015 State Budget (APBN-P 2015). The revisions include the country’s economic growth (GDP) pace, the average rupiah exchange rate, and inflation target. In essence, the revisions indicate that Indonesian authorities have become less optimistic about the Indonesian economy in 2015 amid external pressures.

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The current account deficit of Indonesia, which is expected to have improved slightly from 3.3 percent of the country’s gross domestic product (GDP) in 2013 to about 3 percent of GDP in 2014, is forecast to continue to improve in 2015 hence placing less pressures on the rupiah exchange rate and the economy in general. A wide current account deficit makes the country vulnerable to capital outflows in times of global shocks (for example looming higher US interest rates) as the deficit signals that Indonesia relies on foreign funding.

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The central bank of Indonesia (Bank Indonesia) decided to keep its benchmark interest rate (BI rate) at 7.75 percent at its Board of Governors’ Meeting on Thursday (15/01). The country’s Lending Facility and Deposit Facility were maintained at 8.00 percent and 5.75 percent, respectively. According to the bank this interest rate environment is sufficient to push inflation, which has accelerated to 8.36 percent year-on-year (y/y) in December due to fuel subsidy reforms, back towards its target of 3 to 5 percent (y/y) in 2015.

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Despite having intervened to support the rupiah exchange rate, Indonesia’s central bank announced that the country’s foreign exchange reserves rose USD $800 million to USD $111.9 billion at the end of December 2014. The rise was primarily due to foreign exchange income from Indonesia’s oil and gas exports as well as the withdrawal of government’s foreign debt. Tirta Segara, Executive Director of Bank Indonesia, said that foreign exchange savings and banks swaps with Bank Indonesia had also increased at the end of 2014.

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Although many currencies weakened against the US dollar after the US Federal Reserve stated that it is on track to raise its key Fed Fund Rate "somewhere next year" amid structural improvement of the US economy (after having kept the rate near zero for a "considerable time"), Indonesia's rupiah opened strong on Thursday (18/12). Based on the Bloomberg Dollar Index, Indonesia’s currency had appreciated 0.91 percent to IDR 12,553 per US dollar at 9:15 local Jakarta time.

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Indonesia’s central bank decided to keep its benchmark interest rate (BI rate) at 7.75 percent at Thursday’s Board of Governors’ Meeting (11/12). The Lending Facility and Deposit Facility were kept at 8.00 percent and 5.75 percent, respectively. The central bank is convinced that the current interest rate levels are effective to combat short-term inflationary pressures (triggered by the implementation of higher subsidized fuel prices in mid-November) pushing it back to the target corridor of between 3 and 4 percent (y/y) in 2015.

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The central bank of Indonesia projects non-performing loans (NPL) to rise to 2.4 percent of the country’s total outstanding loans by the end of the year, significantly up from 1.8 percent at the end of last year. Despite the acceleration of bad loans in Indonesia, the institution stated that it is still manageable. Meanwhile, loan growth in Indonesia is estimated to slow to 11 or 12 percent (y/y) by the end of 2014 (the slowest pace since 2010), down from 21.4 percent (y/y) in 2013 primarily due to the central bank’s monetary tightening policy.

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The central bank of Indonesia announced that the country’s foreign exchange reserves declined USD $900 million to USD $111.1 billion at the end of November 2014. The decline was primarily due to government debt repayments and the central bank’s use of foreign exchange to engage in monetary management. Meanwhile, the Indonesian rupiah exchange rate - which had touched six year lows in recent days - appreciated 0.08 percent to IDR 12,299 per US dollar on Friday (05/12) based on the Bloomberg Dollar Index.

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In line with expectations, the central bank of Indonesia (Bank Indonesia) left its benchmark interest rate unchanged on Thursday (16/11). The seven-day reverse repurchase rate (BI 7-day Reverse Repo Rate) was kept at 4.25 percent for a second straight month. Meanwhile, the deposit facility and lending facility rates were kept at 3.50 percent and 5.00 percent respectively.

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The central bank of Indonesia (Bank Indonesia) said it will revise its outlook for Indonesia's economic growth in full-year 2017 after the Q3-2017 GDP growth figure - released at the start of the week - was well below expectations. Previously, Bank Indonesia set its economic growth target for Indonesia in 2017 in the range of 5.0 - 5.4 percent year-on-year (y/y).

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The Bank Indonesia (BI) Board of Governors agreed to hold the BI 7-day Reverse Repo Rate at 4.25 percent, while maintaining the deposit facility and lending facility rates at 3.50 percent and 5.00 percent, respectively, effective per 20 October 2017. The decision was in line with efforts to maintain macroeconomic and financial system stability, while stimulating the domestic economic recovery.

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The central bank of Indonesia (Bank Indonesia) made another surprise move by cutting its benchmark BI 7-day Reverse Repo Rate 25 basis points (bps) from 4.50 percent to 4.25 percent at the September 2017 policy meeting. Meanwhile, Bank Indonesia also lowered the deposit and lending facility rates by 25 bps to 3.50 percent and 5.00 percent, respectively, effective per 25th September.

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For the first time since October 2016, the central bank of Indonesia (Bank Indonesia) altered its benchmark BI 7-day (Reverse) Repo Rate. After a nine-month hiatus the lender of last resort resumed monetary easing through cutting the benchmark by 25 basis points to 4.50 percent at the August 2017 policy meeting. Meanwhile, while the deposit and lending facility rates were also cut by 25 bps to 3.75 percent and 5.25 percent, respectively, effective 23rd August 2017.

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Bank Indonesia is content seeing Indonesia's inflation pace at a rather mild rate of 0.22 percent month-on-month (m/m) in July 2017. Dody Budi Waluyo, Executive Director of Economic and Monetary Policy at the central bank, said low and stable inflation is a positive asset for the economy as it supports the rupiah exchange rate as well as the investment climate and safeguards people's purchasing power.

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After concluding its monthly two-day policy meeting on Thursday (20/07) the central bank of Indonesia (Bank Indonesia) decided to leave its interest rate environment unchanged. The BI 7-day (Reverse) Repo Rate (BI-7 day RR Rate) was kept at 4.75 percent, while the deposit facility and lending facility rates were kept at 4.00 percent and 5.50 percent, respectively.

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The central bank of Indonesia (Bank Indonesia) decided to leave its monetary policy unchanged at the two-day policy meeting in June 2017 that was concluded on Thursday (15/06). As widely expected it kept the benchmark 7-day reverse repurchase rate at 4.75 percent, as well as the deposit facility and lending facility at 4.00 percent and 5.50 percent, respectively. These existing levels are regarded to keep financial markets and the economy stable.

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The central bank of Indonesia (Bank Indonesia) maintained its benchmark interest rate - the 7-day reverse repurchase rate - at 4.75 percent at the policy meeting on 17-18 May 2017, a decision that is in line with analysts' forecasts. Bank Indonesia said the decision is consistent with its efforts to maintain macroeconomic and financial system stability "by driving the domestic economic recovery process", while continue to monitor external threats stemming from US policy directions and geopolitical conditions, specifically in the Korea Peninsula, as well as domestic threats stemming from inflationary pressures and ongoing consolidation in the banking and corporate sectors.

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Data from the central bank of Indonesia (Bank Indonesia) show Indonesia's current account deficit widened modestly to USD $2.4 billion (or 1.0 percent of Indonesia's gross domestic product, GDP) in the first quarter of 2017. This increase was driven by rising deficits in the oil & gas trade balance and primary income. In the last quarter of 2016 the current account deficit was at (an upward revised) 0.9 percent of GDP. Despite slight widening, Indonesia's current account balance is regarded as being in a healthy state, especially considering the major improvement compared to Q1-2016.

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