BI sees room for further interest rate cuts
BI sees room for further interest rate cuts
Dadan Wijaksana, The Jakarta Post, Jakarta
Bank Indonesia expects its benchmark interest rate to go down
further this year, as inflation remains in check while the rupiah
continues to stabilize against the U.S. dollar.
While refusing to specify the range, senior deputy governor
Anwar Nasution said market conditions encouraged the central bank
to continue reducing interest rates.
"Inflation keeps going down and the rupiah is stable, while
the banking sector also shows steady improvement. So we still
have room to further lower the rate," he told reporters on
Thursday.
Bank Indonesia cut the interest rate of its one-month SBI
promissory notes 9 points to 7.77 percent on Wednesday, from 7.86
percent in the previous week.
The rate represents the lowest ever Indonesian interest rate.
Many economists are encouraged by the low interest rates due
to their stimulating effect on the economy.
The cuts will allow commercial banks to lower their lending
rates to the corporate sector, which will help spur production
and encourage economic growth.
Low interest rates will also ease the burden of the government
in servicing interest payments on its domestic bonds.
The latest cut followed reports issued earlier by the Central
Statistics Agency announcing that year-on-year inflation in
January declined to 4.82 percent from 5.06 percent in December --
already the lowest in four years.
The lower inflation rate is related to the relatively stable
rupiah, which is putting little pressure on the price of imported
goods.
Anwar said Indonesia had won praise from global agencies for
its sound monetary policy and fiscal management of late.
International rating agency Fitch was the latest to give a
positive assessment of Indonesia's economy, during a meeting on
Wednesday between the agency and government officials --
including those from the central bank and the Ministry of
Finance.
Anwar believed Indonesia deserved to have its sovereign rating
upgraded, which currently is still four notches below the
investment grade.
Indonesia could use a rating upgrade, especially now the
government was planning to issue global bonds, he said.
Dadan Wijaksana, The Jakarta Post, Jakarta
Bank Indonesia expects its benchmark interest rate to go down
further this year, as inflation remains in check while the rupiah
continues to stabilize against the U.S. dollar.
While refusing to specify the range, senior deputy governor
Anwar Nasution said market conditions encouraged the central bank
to continue reducing interest rates.
"Inflation keeps going down and the rupiah is stable, while
the banking sector also shows steady improvement. So we still
have room to further lower the rate," he told reporters on
Thursday.
Bank Indonesia cut the interest rate of its one-month SBI
promissory notes 9 points to 7.77 percent on Wednesday, from 7.86
percent in the previous week.
The rate represents the lowest ever Indonesian interest rate.
Many economists are encouraged by the low interest rates due
to their stimulating effect on the economy.
The cuts will allow commercial banks to lower their lending
rates to the corporate sector, which will help spur production
and encourage economic growth.
Low interest rates will also ease the burden of the government
in servicing interest payments on its domestic bonds.
The latest cut followed reports issued earlier by the Central
Statistics Agency announcing that year-on-year inflation in
January declined to 4.82 percent from 5.06 percent in December --
already the lowest in four years.
The lower inflation rate is related to the relatively stable
rupiah, which is putting little pressure on the price of imported
goods.
Anwar said Indonesia had won praise from global agencies for
its sound monetary policy and fiscal management of late.
International rating agency Fitch was the latest to give a
positive assessment of Indonesia's economy, during a meeting on
Wednesday between the agency and government officials --
including those from the central bank and the Ministry of
Finance.
Anwar believed Indonesia deserved to have its sovereign rating
upgraded, which currently is still four notches below the
investment grade.
Indonesia could use a rating upgrade, especially now the
government was planning to issue global bonds, he said.