JAKARTA (TheInsiderStories) – Indonesia’ deposit rates has potentially to increase due to the possibility of a benchmark rate hike in 2019, said Deposit Insurance Corporation (DIC) today (12/14).
The agency said, the increase not only occur in Rupiah deposits but also in foreign currency savings. Although, that rate of increase is slower, the agency said.
“As for the adjustment of loan interest rates next year, it is carried out selectively by considering the potential increase in NPL and reserve costs,” said Director of the Economic Risk and LPS Financial System Group Doddy Ariefianto in a written statement.
He revealed, the average benchmark Rupiah deposit rate at the end of November 2018 reached 6.05 percent, an increase of 10 basis points (bps) from previous month. The same thing also happened to the average minimum interest rate, which increased 3 bps to 4,95 percent
While, the maximum interest rate is 17 bps to 7.15 percent. While foreign exchange interest rates in the same period increased around 3 to 6 bps.
Seeing the potential increase in central bank benchmark rates in 2019, Ariefianto said is relatively limited in line with the accelerated changes in the Federal Reserves rate in 2019. Moreover, the potential risk of volatility in the financial markets which tends to subside later this year.
On the other hand, the direction of inflation pressure and the current account deficit level are also other factors for Bank Indonesia to consider when making decisions in determining policy interest rates.
“In the medium term, the direction of interbank interest rates will be determined by the bank’s liquidity needs in channeling credit and changes in the monetary policy taken by BI,” he stated.
As for credit growth, DIC predicts that it will experience a slight slowdown, amid the limited growth in deposits and the potential for a rise in lending rates impacting corporate and consumer behavior in the demand for new loans.
While, the growth of deposits in the next year is predicted to expand. Until the end of the year, credit growth and deposits are expected to reach 11.5 percent and 7.2 percent respectively, while for 2019 it is estimated that it will reach 12.4 percent and 9 percent.
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