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View all search resultsThe Bank of Japan maintained ultra-low interest rates on Thursday and signaled the need to scrutinize global economic developments, highlighting its focus on risks to a fragile domestic recovery in deciding when to next tighten policy.
Falling interest rates in developed economies should see more portfolio investment flow back into emerging markets like Indonesia, but some sectors stand to benefit more than others, and caution is warranted as fears of a US recession continue to haunt global markets.
September data show that the annual inflation rate eased to 1.84 percent, primarily driven by falling food prices due to increased supply following the recent harvest season, with analysts forecasting 25 bps cuts to the BI-Rate in both November and December.
The reduction of Bank Indonesia’s key interest rate brings to an end more than two years of rising borrowing costs. The move follows weeks of well-contained inflation and a strengthening rupiah and comes just hours ahead of a much-anticipated interest rate decision by the United States’ Federal Reserve.
While the ongoing global monetary easing is expected to have a positive impact on Indonesia's economy, stakeholders still need to remain mindful of certain risks and take preventive measure to maintain rupiah stability, enhance domestic liquidity and control inflation.
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