JAKARTA (TheInsiderStories) –Indonesia central bank (BI) keep BI 7 days reverse repo rate remain unchanged at 4.75 percent, with deposit facility and lending facility rate respectively 4 percent and 5.5 percent, said the governor.
“Global economic recovery remains slow and uneven. While commodity price is expected to recover. US growth was corrected on the back of strong job creation and good inflation. In line with that, the Federal Funds Rate (FFR) hike is expected to occur just once in 2016. On the commodity markets, the global oil price remained low due to high OPEC production, while the prices of several export commodities from Indonesia improved, including coal, crude palm oil (CPO) and metal. CPO, coal and other mining of Indonesia commodity price getting better,” Agus Martowardojo, Governor of BI said.
Looking ahead, BI will monitor US new cabinet policy mainly in fiscal, moneter rate and international trade.
In the domestic side, BI see private investment non-building still low, in the middle of negative growth of government spending following budget cut. In the fourth quarter, BI see GDP will growth in limited way, following fiscal consolidation. Over all GDP in 2016 is expected at around 5 percent. And will continue to expanse at 5-5.4 percent in 2017.
Indonesia’s balance of payments in third quarter record an increase of surplus, especially bolstered by trade surplus, also capital and financial, reach $5.7 billion compared to previous quarter of $2.2 billion. While current account deficit narrowed to 1.8 percent GDP from previous quarter 2.2 percent. The position of official reserve assets at the end of September 2016 stood at $115 billion, equivalent to 8.4 months of imports which is well above the international adequacy standard of three months.
The rupiah remained stable with a tendency of appreciating. The rupiah appreciation was limited after US presidential election. Rupiah appreciated 1.39 percent to IDR13,130 in third quarter and appreciated 0.17 percent in October it self to IDR13,048. Meanwhile, after US presidential election rupiah depreciated 2.53 percent to 13,378.
While inflation is expected to reach 3-3.2 percent for overall 2016, hitting the bottom range of central bank target of 4 percent plus minus 1 percent.
The looser monetary policy stance is continuously transmitted through the interest rate channel as reflected by lower lending and deposit rates. In contrast, monetary policy transmission through the credit channel remained suboptimal, in line with limited demand, including low investment demand from corporations. Deposit rate decrease 108 point and credit rate also decrease 60 point at third quarter.