Interest Rate in Indonesia
Indonesia - Interest Rate
Bank Indonesia keeps rates steady in November, but cuts reserve requirements to boost liquidity
At its 20–21 November monetary policy meeting, Bank Indonesia (BI) left the seven-day reverse repo rate unchanged at 5.00%, as had been expected by market analysts. The Bank also left the deposit facility and lending facility rates stable at 4.25% and 5.75% respectively. However, the Bank announced a reduction in reserve requirements in order to boost credit and domestic demand.
The decision to take a breather followed 100 basis points of easing since June, which was aimed at warding off an economic slowdown against a backdrop of the U.S.-China trade spat. As such, BI felt it had done enough for the time being to support the economy, and opted to evaluate the impact of past rate cuts before considering possible further loosening. Moreover, U.S.-China trade tensions have ebbed somewhat in recent weeks, with talks of a partial trade deal in the works, somewhat reducing pressure on the external sector.
In its communiqué, the Bank did not spell out an explicit path for interest rates going forward, but highlighted that its stance will remain accommodative. Most FocusEconomics panelists see further easing before end-2020.
According to analysts at Nomura: “We continue to expect a policy rate cut in the near term because of BI’s clear dovish signals and pro-growth bias.”
Economists at ANZ Bank comment: “We maintain our view that the current easing cycle is nearing its end and continue to see just one more 25bp rate cut.”
FocusEconomics Consensus Forecast panelists project the seven-day reverse repo rate to end 2020 at 4.70% and 2021 at 4.75%.
Indonesia - Interest Rate Data
| 2013 | 2014 | 2015 | 2016 | 2017 | |
|---|---|---|---|---|---|
| Policy Interest Rate (%) | 7.50 | 7.75 | 7.50 | 4.75 | 4.25 |
Indonesia Interest Rate Chart
Source: Bank Indonesia.
Indonesia Facts
| Value | Change | Date | |
|---|---|---|---|
| Bond Yield | 7.09 | -0.05 % | Nov 21 |
| Exchange Rate | 14,088 | 0.05 % | Nov 21 |
| Stock Market | 6,117 | -0.32 % | Nov 21 |
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Economic News
Indonesia: PMI rises in November, but remains depressed
December 2, 2019
Indonesia’s manufacturing sector deteriorated further in November according to the Purchasing Managers’ Index (PMI) released by IHS Markit, albeit at a milder pace.
Indonesia: Inflation stays muted in November, leaving the door open for a further rate cut
December 2, 2019
Consumer prices increased 0.14% in November over the prior month, building on October’s 0.02% rise.
Indonesia: Bank Indonesia keeps rates steady in November, but cuts reserve requirements to boost liquidity
November 21, 2019
At its 20–21 November monetary policy meeting, Bank Indonesia (BI) left the seven-day reverse repo rate unchanged at 5.00%, as had been expected by market analysts.
Indonesia: Retail sales are limp in September
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In September, retail sales increased 0.7% year-on-year, below August’s 1.1% rise and falling short of the Central Bank’s initial estimate of 2.1%.
Indonesia: Economy loses steam marginally in third quarter on weaker domestic momentum
November 5, 2019
The economy expanded 5.0% in the third quarter, according to recent data released by Statistics Indonesia, down from Q2’s revised 5.1% figure (previously reported: +5.0% year-on-year) but matching market expectations. The domestic economy lost steam in Q3.
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