No immediate impacts seen from rate hikes
No immediate impacts seen from rate hikes
JAKARTA (JP): The half percentage point increase in discount
rates of Bank Indonesia's short-term securities last week is
unlikely to immediately affect deposit rates of commercial banks,
bankers say.
"The current rates are already very high, so I don't think
there will be an immediate impact of the rise in the central
bank's discount rates," Agustinus Tjiptoutojo Windoe said.
Agustinus, the president of Bank Mashill, estimated the rate
adjustment will take time because the rise in interest rates will
immediately affect their overhead costs.
Bank Indonesia, the central bank, raised on Friday the
discount rates of its money market securities (SBPUs) by a half
percentage point, to curb the mounting inflationary pressure.
The annual interest rate on the SBPUs for a one-week maturity
was raised to 15.75 percent, while those for two-week and one-
month maturity were increased to 16 percent and 16.5 percent
respectively.
The rise in the discount rates, the third since January, was
made following the announcement of the sharp increase in the
inflation rate in April.
The inflation rate reached its highest monthly level of 1.6
percent in April, as compared to 0.57 percent in March, 1.31
percent in February and 1.16 percent in January.
The surge of the inflation rate brought the combined consumer
price index to 4.75 percent in the first four months of this
year, nearly a half of the annual inflation figures recorded in
each of the last two previous years.
Deposit rates offered by local banks have increased by two
percentage points since January.
The announced rates of time deposits in state-owned and large
private banks remain low, at between 14 percent and 16 percent
per annum. But the deposit rates of smaller banks have already
reached 18.5 percentage points.
Reason
Muliadi Hendri, vice president of Bank Bali, saw no reasons
for local banks to immediately adjust their deposit rates to the
central bank's Friday move.
The current levels of deposit rates offered by local banks are
already high enough to curb the capital flight, he said of the
possible impact of the rise in the central bank's interest rates.
The short-term SBPUs are one of the central bank's monetary
instruments to control the money in circulation. The rise in the
instrument will discourage banks to borrow from the central bank.
In early February, the discount rates were raised by 0.25
percentage point as the adjustment to the 0.5 percentage point
increase in the discount rates of the U.S. Federal Reserve. In
January, SBPU rates were raised by 0.5 percentage point to
stabilize the rupiah.
Other bankers said that the rise in Bank Indonesia's discount
rates last week would give a minimal impact to the interest rates
of domestic banks because the move was purely made to deal with
the inflationary pressure rather than to curb the capital flight.
(hen)