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Latest Reports Bank Indonesia
Although we predicted in our latest research report that Indonesia's central bank (Bank Indonesia) would raise its benchmark interest rate at the two-day monetary policy meeting on 14-15 November 2018, we were still taken by surprise after the decision was announced. After all, the rupiah had appreciated significantly in the days after the launch of our October research report.
The central bank of Indonesia (Bank Indonesia) left its benchmark interest rate (the BI 7-Day Reverse Repo Rate) unchanged at 5.75 percent at the October 2018 policy meeting (22-23 October). Meanwhile, the deposit facility and lending facility rates were kept at 5.00 percent and 6.50 percent, respectively.
The central bank of Indonesia (Bank Indonesia) raised its benchmark interest rate (the seven-day reverse repo rate) by 25 basis points (bps) to 5.75 percent at the two-day policy meeting that was concluded on Thursday (26-27 September 2018). Also the deposit facility and lending facility rates were raised by 25 bps to 5.00 percent and 6.50 percent, respectively.
In line with expectations, the US Federal Reserve decided to raise its benchmark interest rate by 25 basis points to the range of 2.00 - 2.25 percent at the September policy meeting that was concluded on Wednesday 26 September 2018. It is the Fed's eight rate hike since 2015 and the third one so far in 2018.
All eyes remain on the Indonesian rupiah today (04/09). Yesterday, the Indonesian currency depreciated 0.71 percent to IDR 14,815 per US dollar (Bloomberg Dollar Index), and considering external pressures remain high the rupiah is expected to continue its decline in the foreseeable future. Authorities' efforts are able to smoothen the rupiah's weakening trend, hence avoiding sudden big slumps that could trigger panic. But to reverse the current trend of the rupiah, there are no short-term solutions.
The central bank of Indonesia raised its benchmark interest rate (the seven-day reverse repo rate) by 25 basis points (bps) to 5.50 percent at the August 2018 policy meeting. The decision was in line with our expectations as heavy pressures have been affecting the rupiah after the collapse of the Turkish lira.
Indonesian assets are under pressure on Monday (13/08). By 16:00 pm local Jakarta time, the Indonesian rupiah had depreciated 0.90 percent to IDR 14,608 per US dollar, while the benchmark Jakarta Composite Index had plunged 3.55 percent. Although all emerging markets in Asia are under pressure on Monday, Indonesia is seemingly the most fragile one.
In line with expectations, Indonesia's foreign exchange reserves continued to decline for the sixth consecutive month. Per late-July 2018 the country's foreign exchange reserves amounted to USD $118.3 billion, down from the level of USD $119.8 billion one month earlier.
The central bank of Indonesia (Bank Indonesia) believes that the Indonesian government needs to make a more careful selection in terms of infrastructure development projects in order to curtail the big amount of imports that put pressure on the country's current account balance and rupiah exchange rate.
The Indonesian rupiah had been fairly stable against the US dollar since Bank Indonesia's aggressive 0.50 percent rate hike in late-June (a move that caught many by surprise). However, after the central bank of Indonesia decided to leave its benchmark interest rate unchanged at the July policy meeting (which was concluded on Thursday, 19/07), the rupiah has become under heavy pressure again.
Latest Columns Bank Indonesia
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
