Bank Indonesia

October 19, 2017

Indonesia’s 4.25% seven-day reverse repo rate, which had been cut by 25 basis points each at successive previous reviews in August and September, was this time left unchanged, as too were the 3.5%overnight deposit facility rate and 5.0% lending facility rate. In September, officials had indicated that the main interest rate had reached a “neutral” level, and this month’s post-meeting statement reiterated that a 4.25% rate level “is considered adequate to maintain inflation within the target corridor and current account deficit at a sound level.” Strengthening growth in Europe and China was noted, and officials project that Indonesian growth in 3Q appears to have exceeded the 2Q pace. The trade surplus widened, and the rupiah strengthened last month. “Core inflation has tracked a downward trend due to anchored expectations, low import price, and limited consumption.” The statement expresses satisfaction with the resilience of the banking industry recent stability of financial markets. During 2016, six interest rate reductions of 25 basis points each were implemented by Bank Indonesia officials.

Copyright 2017, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

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