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Enough room to cut BI rate: Economist
Eyes on BI: Bank Indonesia (BI) is set to announce the result of board of governors' meeting on Thursday
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Eyes on BI: Bank Indonesia (BI) is set to announce the result of board of governors' meeting on Thursday. Bank Central Asia chief economist David Sumual has said that there is enough room for the central bank to cut the benchmark interest rate (BI rate) this month as there are many supporting factors, both internationally and domestically. (thejakartapost.com/Wienda Parwitasari) (BI) is set to announce the result of board of governors' meeting on Thursday. Bank Central Asia chief economist David Sumual has said that there is enough room for the central bank to cut the benchmark interest rate (BI rate) this month as there are many supporting factors, both internationally and domestically. (thejakartapost.com/Wienda Parwitasari)
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span class="inline inline-center">Eyes on BI: Bank Indonesia (BI) is set to announce the result of board of governors' meeting on Thursday. Bank Central Asia chief economist David Sumual has said that there is enough room for the central bank to cut the benchmark interest rate (BI rate) this month as there are many supporting factors, both internationally and domestically. (thejakartapost.com/Wienda Parwitasari)
There is enough room for Bank Indonesia (BI) to cut the benchmark interest rate(BI rate) this month as there are many supporting factors, both internationallyand domestically, an economist has said.
The Jakarta Composite Index (JCI) rose 20.5 points or 0.43 percent to 4,765.5
in Wednesday's
closing session, when the central bank also held a board of governors' meeting.
The rupiah, however, weakened by 20 points to 13,414 per US dollar.
"The current situation is supportive for BI to decrease the BI rate,"
Bank Central Asia chief economist David Sumual told thejakartapost.com
on Wednesday
in Jakarta.
Internationally, he explained, the US Federal Reserve had sounded a note of
concern about how global pressures could affect a slowing US economy, forcing
the key interest rate to remain unchanged. On the other hand, the Bank of Japan
recently decided to implement a negative rate.
Domestically, David said, inflation was well-maintained and the country was likely
to see deflation in February as the government had released corn and rice
stocks to tame the price volatility of staple foods.
As for the rupiah, David pointed out that foreign investors kept coming to
Indonesia and buying government bonds (SUN), leading to Rp 65 trillion of
inflow recently and decreasing yields from 8.8 percent in 2015 to 7.9 percent.
"A lower rate should be supported with regulations that ease business.
Only then can foreign investors shift their money to real sectors as the
foreign portion in SUN is still too high," he added.
Foreign ownership in Indonesia's government bonds reached 39 percent, higher
than that in other Southeast Asian countries of around 10 to 20 percent.
After a two-day board of governors' meeting, BI is set to resume and announce the result in a press statement on Thursday. Currently, the BI rate is at 7.25 percent. (ags)
