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)