The Indonesian government, central bank (Bank Indonesia) and the Financial Services Authority (OJK) have formed a team that will study and encourage lower lending and mortgage rates in Indonesia - to single digit levels - by the end of 2016. Indonesia's Chief Economics Minister Darmin Nasution explained that this is part of government efforts to boost economic activity in Southeast Asia's largest economy. Indonesia's lending rates have been high due to banks' prudent management and the high cost of funds, hence limiting credit growth as well as economic growth.

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In line with expectations, the central bank of Indonesia (Bank Indonesia) cut its benchmark interest rate (BI rate) by 25 basis points to 7.0 percent at its February Board of Governor's policy meeting. Its overnight deposit facility rate (known as Fasbi) and lending facility rate were also cut by 0.25 percent to 5.00 percent and 7.50 percent, respectively. After the rate cut in January it was the second straight month of lower borrowing costs in Southeast Asia's largest economy. Meanwhile, Bank Indonesia also cut the reserve-requirement ratio for rupiah deposits at commercial banks by 100 basis points to 6.5 percent.

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Today, Bank Indonesia will start its February two-day policy meeting. Markets are eagerly awaiting whether the central bank of Indonesia will indeed cut its key interest rate (BI rate) again. Last month, it had cut the BI rate by 0.25 percent to 7.25 percent as inflation, the current account deficit and the rupiah rate were all under control. Although the rate cut was welcomed by the business community it was considered not enough to push borrowing costs lower in Southeast Asia's largest economy hence unable to boost economic activity significantly.

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The latest survey of Indonesia's central bank (Bank Indonesia) shows that price growth and sales growth in Indonesia's residential property sector continued to slow in the fourth quarter of 2015. The Q4-2015 residential property price index rose by a mere 0.73 percent (quarter-to-quarter) from a growth pace of 0.99 percent (q/q) in the preceding quarter. Indonesian property developers expect that this slowdown will continue at least throughout the first half of 2016.

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The Indonesian rupiah is appreciating markedly on Wednesday (10/02). By 12:30 pm local Jakarta time, Indonesia's currency had appreciated 1.62 percent to IDR 13,391 per US dollar based on the Bloomberg Dollar Index, a three-month high. Today, most emerging currencies in Asia are appreciating against the US dollar ahead of Fed Chair Janet Yellen's testimony in US Congress this week. Other factors that support strong rupiah appreciation are speculation that Indonesia will attract investors due to accelerating domestic economic growth and the move of Japan's central bank to introduce negative interest rates.

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The central bank of Indonesia (Bank Indonesia) announced on Friday (05/02) that Indonesia's foreign exchange reserves declined USD $3.8 billion to USD $102.1 billion at the end of January 2016. This fall was caused by government (foreign) debt settlements as well as interest payments over global bonds. The central bank emphasized that the country's foreign exchange reserves are still at a safe level as they can adequately cover 7.5 months of imports or 7.2 months of imports and servicing of government external debt repayment, well above the global reserve standard at three months of imports.

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The central bank of Indonesia (Bank Indonesia) reported that Indonesian consumers are becoming increasingly optimistic about economic prospects and their personal financial situation this year, evidenced by a 5.1 point rise in Bank Indonesia's Consumer Confidence Index to 112.6 points in January 2016. This index is based on a survey, involving 4,600 households in 18 cities across the archipelago (a reading above 100 indicates optimism, while a reading below 100 indicates pessimism).

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As expected, credit growth in Indonesia slowed in 2015 amid the nation's overall economic slowdown. Loan growth was particularly affected by weaker demand for property and working capital loans. Indonesia's gross domestic product (GDP) growth in 2015 is estimated to have slowed to 4.7 percent year-on-year (y/y), the country's slowest growth pace since 2009. In its January policy meeting Bank Indonesia decided to cut its key interest rate by 25 basis points to 7.25 percent, a move that should encourage loan growth this year in Southeast Asia's largest economy.

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Although causing waves of both criticism and support, Indonesia's central bank implemented BI Regulation No. 17/3/PBI/2015 regarding the Mandatory Use of the Rupiah in Indonesia on 1 July 2015 thus restricting the use of foreign currencies in transactions conducted within Indonesia in an effort to deepen the domestic rupiah market and stabilize the rupiah. After nearly seven months in effect the new regulation seems to have worked and lessened domestic demand for the US dollar according to a Bank Indonesia official.

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Indonesia's inflation is expected to accelerate in January 2016 according to the country's central bank (Bank Indonesia). Bank Indonesia detected a spike in prices of several food commodities - such as shallots, chili, and beef - at the start of the year. Bank Indonesia Governor Agus Martowardojo told reporters that he expects the country's inflation rate to rise by around 0.75 percent month-on-month (m/m) in January. This would imply that inflation will accelerate to 4.38 percent on an annual basis (from 3.35 percent y/y in December 2015).

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The central bank of Indonesia (Bank Indonesia) kept its benchmark interest rate (seven-day reverse repo rate) at 4.75 percent at the April policy meeting (19-20 April 2017), while its deposit facility rate and lending facility rate stayed at 4.00 percent and 5.50 percent, respectively. Bank Indonesia considers the current interest rate environment appropriate to face global uncertainties as well as rising inflationary pressures at home.

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The central bank of Indonesia (Bank Indonesia) left its interest rate policy unchanged at the March 2017 policy meeting. This decision was in line with expectations especially after Bank Indonesia officials had stated that they see few room for monetary easing in the foreseeable future considering the US Federal Reserve is likely to raise its key rate several times this year (which could encourage capital outflows from Indonesia), while inflationary pressures in Indonesia are rising.

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Bank Indonesia, the central bank of Indonesia, decided to maintain its benchmark interest rate, the BI 7-day (Reverse) Repo Rate (BI-7 day RR Rate), at 4.75 percent at the February 2017 policy meeting as Indonesia's inflation rate is expected to rise amid growing domestic demand and administered price adjustments, while the central bank also tries to mitigate the impact of looming normalization of US interest rates (expected later this year). Meanwhile, Bank Indonesia kept its deposit facility and lending facility rates at 4.00 percent and 5.50 percent, respectively.

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Bank Indonesia, the central bank of Indonesia, announced on Friday (10/02) that Indonesia's balance of payments surplus reached USD $4.5 billion in the fourth quarter of 2016 as the capital and financial accounts' surplus managed to (more than) compensate for the USD $1.8 billion current account deficit (or 0.8 percent of the country's gross domestic product/GDP) in the same quarter. Regarding full-year 2016, Indonesia posted a USD $12.1 billion surplus in its balance of payments, while its current account deficit was equivalent to 1.8 percent of GDP.

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The central bank of Indonesia (Bank Indonesia) decided to leave its interest rate environment unchanged at the January 2017 policy meeting on Thursday (19/01). The benchmark seven-day reverse repurchase rate (BI 7-day RR Rate) was kept at 4.75 percent, while the Deposit Facility and Lending Facility rates were maintained at 4.00 percent and 5.50 percent, respectively. The decisions of Bank Indonesia are in line with analysts' forecasts. Due to risks of capital outflows Indonesia's central bank had few room to ease monetary policy.

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Stock markets in Asia are mixed, yet tepid on Friday (16/12) after the US Federal Reserve raised its interest rate regime for the second time in a decade on Wednesday (14/12). Although the Fed's move was widely anticipated (and therefore already "priced in" to a high degree) it still resulted in some capital outflows from Asia's stock markets on Thursday (13/12). Japan, as usual, is the notable exception as US dollar strength (or yen weakness) makes Japan's export-oriented stocks more attractive.

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Bank Indonesia, the central bank of Indonesia, kept its benchmark interest rate unchanged at the December 2016 policy meeting, nearly a day after the US Federal Reserve decided to raise its key Fed Funds Rate by 25 basis points to the range 0.50 - 0.75 percent. Moves of both central banks were expected. Monetary tightening in the USA triggers capital outflows from emerging markets (the Indonesian rupiah depreciated around 0.70 percent against the US dollar on Thursday). Therefore, Bank Indonesia had little room to seek monetary easing.

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The Bank of Indonesia recently resorted to a sudden cut in interest rate (by 25 bps to 4.75 percent) at its 20th October 2016 meeting. This followed a 25 bps reduction in September and thus this is the sixth time this year that the Indonesian central bank has elected to loosen monetary policy.

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In line with expectations Indonesia's central bank (Bank Indonesia) kept its benchmark reference rate - the BI 7-Day (Reverse) Repo Rate - at 4.75 percent at Thursday's policy meeting (17/11). This decision was made amid the high degree of uncertainty in global financial markets (triggered by the 2016 US presidential election) and stable domestic conditions (low inflation and an improving current account deficit). The high degree of volatility does cause major pressures on the rupiah and therefore Bank Indonesia will continue to stabilize exchange rates through intervention in markets.

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Bank Indonesia (BI) is the central bank of the Republic of Indonesia, and was known as "De Javasche bank" or "The Java Bank" in the colonial period.  Bank Indonesia was founded on 1 July 1953 from the nationalization of De Javasche Bank. As an independent state institution, Bank Indonesia is fully autonomous in formulating and implementing each of its assumed tasks and most policy goals tend to center around the ability to stabilize prices in the economy.

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