{
    "success": true,
    "data": {
        "id": 1040951,
        "msgid": "interest-rates-expected-to-rise-economist-1447893297",
        "date": "1996-12-20 00:00:00",
        "title": "Interest rates expected to rise: Economist",
        "author": null,
        "source": "JP",
        "tags": null,
        "topic": null,
        "summary": "Interest rates expected to rise: Economist SEMARANG (JP): Bank interest rates are expected to rise next year despite persistent efforts to cut them, economist Sjahrir said here yesterday. Sjahrir told a seminar the rate rise would be driven by the central bank's reserve requirement policy forcing commercial banks to increase their minimum reserves to 5 percent of their net weighted assets next April from 3 percent.",
        "content": "<p>Interest rates expected to rise: Economist<\/p>\n<p>SEMARANG (JP): Bank interest rates are expected to rise next<br>\nyear despite persistent efforts to cut them, economist Sjahrir<br>\nsaid here yesterday.<\/p>\n<p>Sjahrir told a seminar the rate rise would be driven by the<br>\ncentral bank's reserve requirement policy forcing commercial<br>\nbanks to increase their minimum reserves to 5 percent of their<br>\nnet weighted assets next April from 3 percent.<\/p>\n<p>\"Such an increase in the reserve requirement will<br>\nautomatically reduce money supply. And it could drive up interest<br>\nrates,\" Sjahrir said.<\/p>\n<p>Bank Indonesia announced the new reserve requirement in<br>\nSeptember, requiring banks to place 5 percent of their third<br>\nparties' funds (time deposits, savings and cash) in their central<br>\nbank accounts.<\/p>\n<p>The country's 240 commercial banks' savings and time deposits<br>\nwere worth Rp 252.2 trillion (US$106.4 billion) in September,<br>\naccording to Bank Indonesia.<\/p>\n<p>Sjahrir's statement on a possible interest rate rise<br>\ncontradicts many who have predicted commercial banks would soon<br>\nlower their lending rates because of too much liquidity, lower<br>\ninflation rates and political pressure.<\/p>\n<p>The inflation rate is expected to be below 7 percent this<br>\nyear, compared to 8.64 percent last year and 9.24 in 1994.<\/p>\n<p>Earlier this year, State Minister of Research and Technology<br>\nB.J. Habibie proposed the central bank spearhead efforts to halve<br>\ninterest rates.<\/p>\n<p>His call drew wide support, forcing state banks to cut their<br>\ndeposit rates by between 0.5 percent and 1 percent. Private banks<br>\nhave not followed the state banks' rate cut.<\/p>\n<p>Bank Indonesia Governor J. Soedradjad Djiwandono told a<br>\nseminar in Jakarta Wednesday that forcing banks to cut their<br>\ninterest rates was difficult. He said many banks depended on<br>\nlarge depositors who demanded higher interest rates.<\/p>\n<p>\"It must be very difficult for these kinds of bank to cut<br>\ntheir rates,\" Soedradjad said.<\/p>\n<p>An independent research group has estimated that almost 25<br>\npercent of funds at commercial banks were controlled by several<br>\npeople.<\/p>\n<p>Sjahrir said the interest rate rise would attract more capital<br>\ninflow because of widening differentials between domestic and<br>\nforeign interest rates.<\/p>\n<p>The speculative inflow, driven by interest rate differentials<br>\nrather than economic fundamentals, could undermine macroeconomic<br>\nmanagement. And it would not finance productive projects.<\/p>\n<p>The inflow, if not well managed, would strengthen the rupiah<br>\nagainst major currencies and eventually weaken exports, Sjahrir<br>\nwarned. (har\/rid)<\/p>",
        "url": "https:\/\/jawawa.id\/newsitem\/interest-rates-expected-to-rise-economist-1447893297",
        "image": ""
    },
    "sponsor": "Okusi Associates",
    "sponsor_url": "https:\/\/okusiassociates.com"
}