BI cuts interest rates to 13.06 percent, more to come
BI cuts interest rates to 13.06 percent, more to come
The Jakarta Post, Jakarta
Bank Indonesia cut the weighted average interest rate on one-
month SBI promissory notes at Wednesday's auction to 13.06
percent from 13.08 percent a week earlier, while indicating the
rate could further decline due to the recent strengthening of the
rupiah in relation to the U.S. dollar.
"The interest rate still has a chance of declining further,
primarily because of a strengthening rupiah," BI deputy governor
Miranda Gultom told reporters Wednesday on the sidelines of a
hearing with the House of Representatives' Commission IX on
financial affairs.
The rate has been declining since the end of last year, when
it was hovering at around 17 percent.
Miranda attributed the strengthening of the local currency in
recent weeks partly to the government's progress in the Bali
bombing investigation.
The currency stumbled to 9,300 per dollar following the Bali
bomb blasts on Oct. 12, but it has been since regaining most of
its lost ground.
On Monday, the rupiah broke the 9,000 level for the first time
since the attacks. It closed in Wednesday's trading at 8,970.
Five weeks after the strikes, which killed almost 200 people,
mostly foreign tourists, the police have nabbed one suspect
behind the bomb blast, and identified at least six others.
A stronger rupiah means that imported goods will be less
expensive, easing inflationary pressures. Manageable inflation
would then provide more leeway for the central bank to cut its
interest rates.
Inflation grew by 10.33 percent in October year on year.
A lower SBI rate will help press banks to lend more to the
real sector. As such, it will help revive the economy.
As of September, total credits from national banks reached Rp
387.7 trillion (about US$42 billion), including Rp 18.5 trillion
in new loan approvals during the month, according to BI.
Of the new credit approvals, Rp 3.6 trillion of which went to
the small- and medium-scale enterprises (SMEs), bringing in the
total credit for SMEs between January-September to Rp 24.7
trillion.
The central bank also reported that in September, the national
banks' third party liabilities rose to Rp 815 trillion from Rp
811.2 trillion the month before.