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Possibility of monetary easing remains open: BI
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Bank Indonesia Governor Agus Martowardojo greets journalists during a press conference in Jakarta. (ANTARA FOTO/Yudhi Mahatma)
T
he central bank has signaled a further easing in its monetary policy to accelerate the economy after announcing the seven-day reverse repo (7DRR) rate as the country’s new benchmark interest rate.
Bank Indonesia (BI) Governor Agus Martowardojo said the central bank saw that the economy had been showing signs of recovery with well-managed inflation within the target range of 3 percent to 5 percent.
In addition, the current account deficit narrowed from US$4.8 billion, 2.2 percent of the country’s gross domestic product (GDP), in the first quarter of 2016, to $4.7 billion or 2 percent of GDP in the second quarter.
"Room for monetary easing remains open. We see a chance for it [monetary easing] but it must be supported by economic data," Agus said in Jakarta on Friday.
BI believes that by maintaining macroeconomic stability as shown by controlled inflation within the target range, an improved current account deficit and a relatively stable exchange rate, the possibility of monetary easing remains open.
Agus added that the central bank would observe short-term domestic conditions and global economic developments, especially a possible US Federal Reserve fund rate hike, while constantly strengthening coordination with the government to accelerate structural reforms. (ags)
