JAKARTA (TheInsiderStories) – Bank Indonesia (BI) governor Perry Warjiyo rated that the adjustment of the 7-day reverse repo (BI-7DRR) rate, which is currently at the level of 6 percent, has almost reached its peak. This month the central bank maintained its benchmark rate followed the global conditions.
He said, BI’ policy was carried out through a pre-emptive approach to addressing global economic developments and always be reviewed at the governor’s board meeting taking into account the current situation.
The Federal Reserves (Fed) rate was estimated will go up three or four times in 2019, but Warjiyo saw the United States (US) central bank interest rate hike at most twice.
“In determining the benchmark interest rate, we are doing forward looking and pre-emptive. The latest increase in November has been price-in and takes into account the Fed Fund’s benchmark interest rate increase in December and March,” he said.
During 2018, BI has raised its benchmark interest rate to 175 basis points or as much as six times, from the previous 4.25 percent to 6.00 percent, in anticipation of developments in monetary policy in the US.
Meanwhile, the Financial System Stability Committee (FSSC) concluded, that financial system stability in the fourth quarter (4Q) of 2018 was in normal condition. This was based on the results of monitoring the development of monetary, fiscal, financial market and deposit insurance economies.
The Committee looks at a number of potential risks contributing from the global which is weakening global economic growth in US and the impact of trade disputes with China. Also there are potential risks from domestic side that is the continuing of trade balance and current account deficits.
“Responding to this, the committee strengthens the synergy of fiscal, monetary, macro-prudential and micro-prudential policies,” said Finance Minister Sri Mulyani Indrawati in the press conference at her office.
In the monetary sector, BI optimizes the policy mix for inflation control and exchange rate stability and strengthens coordination with the government to control the current account deficit.
In the fiscal sector, the 2018 State Budget closes with good performance with a smaller deficit of state revenues above healthy state targets and spending, said Indrawati.
In the financial sector, the Financial Services Authority strengthens policy and supervision of the financial sector in order to increase its role as a driving force for economic growth while paying attention to the principle of prudence.
In the field of guaranteeing banking customers, the Deposit Insurance Corporation continues to monitor and evaluate continuously the trend of developments in bank deposit interest rates which still shows an increasing trend.
Anticipating economic development in 2019, the board stated will continue to strengthen synergy and coordination among members and improve governance, information sharing and intensify public communication.
Indrawati added, FSSC will hold regular meetings again in April 2019.
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