JAKARTA (TheInsiderStories) –Bank of Indonesia (BI) hint a limited monetary policy easing, after Chairman of the Federal Reserves Janet Yellen stated the Fed rate rise could come ‘relatively soon’ as Unite State (US) economy going stronger, the governor Agus Martowardojo said.
Previously, BI hold BI’s 7 days reverse repo rate at 4.75 percent amid the current global economy condition. He said, the central bank will continue to ‘act’ carefully and maintain financial stability system and will monitor US economy condition following the presidential election.
“Its (high possibility of fed rate hike on December ) already in our asassement on last board of governors meeting resulted. At this moment we can say we have limited room for further loosening our monetary policy,” Agus told reporters at his office.
Donald Trump win has lead an Rp 16 trillion capital outflow from Indonesia financial market during Nov. 9 to 14. Capital outflow was driven by US on going condition as well as many investors ‘take profit’ action. Having said that, Indonesia still record net inflows Rp133 trillion.
“We believe it (capital flow) will return early next year, as our economic fundamental still good,” he said.
BI has lowered its economic growth outlook from 5.1 percent to 5.5 percent to 5.0 to 5.4 percent due to a delay in loan expansion, lower global economic growth and a smaller increase in government spending. The Indonesian economy grew by 5.02 percent in the third quarter from the same period a year ago.
“We are seeing global economic growth to be less favorable with uncertainties remaining in developed economies such as the US and Europe next year. Also, there is an overall decline in global trade,” Agus stated.
He added that export, which account for about a sixth of Indonesia’s GDP, has been seeing increase in prices but the volume remains flat.