Interest Rate in Indonesia
Indonesia - Interest Rate
Bank Indonesia leaves rates unchanged in May amid renewed currency pressure
At its 15-16 May monetary policy meeting, Bank Indonesia (BI) left the seven-day reverse repo rate at 6.00% for the sixth consecutive meeting, in line with market expectations. In addition, the Bank left the deposit facility rate and lending facility rate at 5.25% and 6.75%, respectively. At its previous meeting in April, the Bank had announced further macroprudential measures to boost liquidity and stimulate domestic demand. The Bank’s decision to stay put came following renewed pressure on the rupiah in recent weeks, on the back of the escalation in the U.S.-China trade war and seasonally higher demand for foreign currency. In mid-May, the currency had sunk to close to IDR 14,500 per USD, the weakest level so far this year, and any rate cut by the Bank would have risked exacerbating the depreciation. However, BI was confident that the current currency weakening would be temporary and, with domestic price pressures muted, thus saw no reason to hike rates either.
Bank Indonesia did not provide any explicit forward guidance in its communiqué. That said, given resilient economic growth, the currency’s vulnerability to changes in investor sentiment and the sizeable current account deficit—which the Central Bank now estimates will be larger than previously expected this year—the Bank is unlikely to risk a rate cut in the near-term. The majority of FocusEconomics panelists share this view, although a few panelists do see rates being lowered towards the end of 2019.
According to Wisnu Wardana, an economist at Bank Danamon: “A shift of monetary stance would require a more balanced external account, […]. Given current conditions, […] any room to cut policy rates will transpire at the last month of this year.”
The next monetary policy meeting will be held on 19-20 June.
Last month, FocusEconomics Consensus Forecast panelists expected the seven-day reverse repo rate to end 2019 at 5.98% and 2020 at 5.77%. A new Consensus Forecast will be published on 21 May.
Indonesia - Interest Rate Data
|Policy Interest Rate (%)||7.50||7.75||7.50||4.75||4.25|
5 years of economic forecasts for more than 30 economic indicators.
Indonesia Interest Rate Chart
Source: Bank Indonesia.
|Bond Yield||7.70||-0.05 %||Jun 13|
|Exchange Rate||14,280||0.05 %||Jun 13|
|Stock Market||6,273||-0.32 %||Jun 13|
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June 14, 2019
In April, retail sales expanded 6.7% in annual terms, down from March’s 10.1% growth but above the Bank’s initial estimate of 5.7%.
June 10, 2019
Consumer prices increased 0.68% in May over the previous month, up from April’s 0.44% increase.
June 3, 2019
Conditions in Indonesia’s manufacturing sector improved at a faster pace in May, according to the Purchasing Managers’ Index (PMI) released by IHS Markit and Nikkei, with the PMI increasing from 50.4 in April to 51.6 in May.
May 16, 2019
At its 15-16 May monetary policy meeting, Bank Indonesia (BI) left the seven-day reverse repo rate at 6.00% for the sixth consecutive meeting, in line with market expectations.
May 15, 2019
According to Statistics Indonesia, the country recorded a trade deficit of USD 2.5 billion in April, contrasting March’s revised USD 0.7 billion surplus and coming in substantially above market expectations of a mere USD 0.5 billion shortfall.