Upbeat that inflation will eventually subside over the course of the year, the central bank has left its key interest rate unchanged at 12.75 percent in a move that should help avert a further slowdown in economic growth.
"Macroeconomic stability has been maintained, relatively speaking, with inflation under control, the rupiah gaining strength, and the banking sector still performing quite satisfactorily -- all of which are as we expected," the Bank Indonesia Board of Governors said in a statement after their monthly meeting to assess the economy Tuesday.
The central bank kept its BI rate unchanged last month, hinting at the beginning of the end of its monetary tightening, which began last July, after consumer prices fell by 0.04 percent in December.
Following December's deflation, monthly inflation of 1.36 percent in January, however, stoked fears that the central bank might tighten its monetary policy once again by further raising the key interest rate. BI Governor Burhanuddin Abdullah had also said that the central bank still regarded inflationary pressures as high, despite the rupiah's recent strengthening against the U.S. dollar.
Analysts had, nevertheless, expected BI to continue tempering its monetary policy, given that inflation was being brought under control with the current interest rate. The government is expecting full-year inflation of 8 percent, with BI allowing a plus-minus range of 1 percent.
Mandiri Sekuritas chief economist Kahlil Rowter, who had forecast that BI would leave its rate unchanged, said the decision was also due to the fact that rupiah-denominated assets were now more attractive than dollar-denominated ones.
Given the current BI rate, the U.S. Federal Reserve rate of 4.5 percent, and their respective yields, Kahlil said the real interest rate differential between the rupiah and dollar assets was between 0.6 and 1 percent.
"This range is within BI's comfort zone and enough to attract investors. And with the rupiah recently gaining against the greenback, there is no need for BI to raise its rate," he said.
Despite continuing moderation in its monetary policy, BI has warned of various external and internal factors that could disrupt macroeconomic stability and economic growth over the coming months.
"Inflation has been contained, but there are still risks to the economy. Externally, there exists the risk of volatility in the prices of oil and other commodities, as well as a possible slowdown in the global economy," Burhanuddin told reporters after the board's meeting.
Meanwhile, adverse factors at home included the poor investment climate and defective taxation system, both of which were hampering growth in the real sector.
Source:
Urip Hudiono, The Jakarta Post, Jakarta
February 08, 2006
PowerPR alert on Indonesia
- ‘UNIQLO Goes to School’ Bekali Siswa di Surabaya Memasuki Industri Ritel - 8/28/2017
- British Company Churchill Mining Plc Published False Information And Blackmails Indonesian Government - 10/18/2012
- Indonesia Stands Firm in Churchill Mining Dispute - 9/26/2012
- Indonesia vs Churchill Mining: Churchill has never secured a Mining Business License in Indonesia - 9/24/2012
Indonesia News
- Indonesia Corporate Bond Spreads Hit Six-Month Wide Amid Turmoil - Bloomberg - 3/19/2025
- Indonesia Fast-Tracks Military Changes Despite Public Backlash - Bloomberg - 3/19/2025
- Bank Indonesia could tip the scales in its shaky markets - Reuters - 3/19/2025
- Indonesia’s Imajinari Unveils Film Slate at Hong Kong FilMart (EXCLUSIVE) - Variety - 3/19/2025
- Indonesia’s Wild Stock Moves Spark Fresh Investability Concerns - Yahoo Finance - 3/19/2025
Indonesia Business News
- Exclusive: Cobalt produced by China's Lygend in Indonesia skirts Trump tariffs - Reuters - 3/17/2025
- Indonesia stocks drop more than 7%; trading halted - Nikkei Asia - 3/18/2025
- Danantara's fossil energy project funding poses economic risks: CERAH - Indonesia Business Post - 3/19/2025
- Indonesia’s wild stock moves spark fresh investability concerns - The Straits Times - 3/19/2025
- U.S. Companies Deliver $130 Billion Economic Impact to Indonesia’s Growth - US Embassy and Consulates in Indonesia - 11/27/2024
Indonesia Economy
- Indonesia’s economic diplomacy must begin at home - East Asia Forum - 3/18/2025 -
- Right to Repair and Circular Economy - Transnational Institute - 12/10/2024 -
- Why Is Indonesia One of the Fastest Growing Economies in the World? - MSN - 3/18/2025 -
- Indonesian Stock Plunge Triggers Trading Halt on Economic Woes - MSN - 3/18/2025 -
- Indonesia’s populist policies lead to weak investor confidence, drag stock market down: Analysts - The Straits Times - 3/18/2025 -
Indonesia Group of Company
- Hyundai Motor Group chief visits Indonesia for EV, hydrogen partnership - 코리아타임스 - 5/21/2024 -
- New carriers Indonesia Airlines, Fly Jaya set to take off in 2025 - The Jakarta Post - 3/11/2025 -
- AnyMind Group becomes B2B distributor for Nutrifood on Shopee Mart in Indonesia - AnyMind Group - 3/6/2025 -
- Indonesian Technology Company, WIR Group to Introduce Indonesia's Metaverse Prototype - ACN Newswire - 5/3/2022 -
- Garuda Indonesia and Japan Airlines Commence Joint Business - JAL - 3/7/2025 -
Indonesia Finance
- Indonesia stocks drop more than 7%; trading halted - Nikkei Asia - 3/18/2025 -
- Indonesia May Hold Rate as Stocks, Trade Turmoil Threaten Rupiah - Bloomberg - 3/18/2025 -
- Indonesia Corporate Bond Spreads Hit Six-Month Wide Amid Turmoil - Mint - 3/19/2025 -
- Indonesia’s wild stock moves spark fresh investability concerns - The Straits Times - 3/19/2025 -
- South Africa, Indonesia Say US Withdrawing From Climate Finance Deal - ETV Bharat - 3/6/2025 -
Indonesia Banking - News
- Grab, Singtel-backed Super Bank mulls IPO: report - Asian Banking & Finance - 1/15/2025 -
- Instapay Technologies Enters Indonesia in Collaboration with Amar Bank - SME Magazine - 3/17/2025 -
- VinFast and Bank Negara Indonesia Partner to Accelerate EV Adoption in Indonesia - Fintech News Singapore - 3/17/2025 -
- Banking on sustainability: structural adjustment and forestry reform in post-Suharto Indonesia - cifor-icraf - 2/15/2025 -
- Indonesia's central bank uses Ramadan sermons to preach on inflation, Money News - AsiaOne - 3/10/2025 -
Indonesia Investment - News
- Indonesia launches new multi-billion-dollar sovereign wealth fund - TUOI TRE NEWS - 2/24/2025 -
- Indonesia to issue Freeport Indonesia a six-month permit to export copper concentrate - Reuters.com - 3/17/2025 -
- UAE’s Green Bet on Indonesia’s Danantara – A Model for the Middle East - The Geopolitics - 3/16/2025 -
- Vingroup’s Ambitious Green Vision Finds a New Frontier in Indonesia - CleanTechnica - 3/16/2025 -
- Oracle considers Batam, Indonesia investment- sources - MSN - 3/15/2025 -
Indonesia Capital Market - News
- Indonesian Stocks Plunge Most Since 2011 as Growth Worries Mount - Yahoo Finance - 3/18/2025 -
- Indonesian stocks tumble 4% on concerns over economy - Financial Times - 3/18/2025 -
- Stock Market Crash: What caused Jakarta Composite's biggest plunge in 14 years? - CNBCTV18 - 3/18/2025 -
- Analysts: JCI’s 5% Drop is A Warning Sign for Indonesia’s Economy - Jakartaglobe.id - 3/18/2025 -
- Indonesian stocks plunge most since 2011 as growth worries mount - The Straits Times - 3/18/2025 -
Indonesia State-Owned Company - News
- DPR Set to Approve Revised SOEs Law, Paving the Way for Danantara Investment Superholding - Jakartaglobe.id - 2/3/2025 -
- Indonesian Attorney-General suggests death penalty for Pertamina graft suspects - The Star Online - 3/10/2025 -
- Indonesia: State-owned Companies Could Front A400M Deal - Aviation International News - 3/13/2018 -
- FPT Provides Advanced Artificial Intelligence to Indonesia’s Largest Oil Company, Pertamina - Business Wire - 3/11/2025 -
- Indonesia's Pertamina pledges to improve transparency following corruption allegations - CNA - 3/3/2025 -
Indonesia Mining
Indonesia Energy - News
Indonesia Airlines - News
Indonesia Infrastructure - News
Indonesia Shipping and Cargo - News
Indonesia AgriBusiness
Indonesia Entrepreneurship
Indonesia Corporation
Reuters: Business News
Strategic Indonesia
Indonesia Law Enforcement
Indonesia Corruption - News
Indonesia Money Laundering Update
Indonesia Reform Update
Indonesia Religion Issues
Indonesia Security Issues
Indonesia Politics Issues
Indonesia Election 2009 Issues
Indonesia Education Update
Wednesday, February 08, 2006
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment