A meeting of Bank of Indonesia’s Governor Council was held a few days ago, on 22-23 October 2018. Bank Indonesia announced that Perry Warjiyo and colleagues have maintained the BI 7 Day Reverse Repo Rate at 5,75% this month. The decision has been made to reduce the current- account deficit to a favorable and safe limit. Also, the decision maintains the attractiveness of the domestic financial market in order to strengthen the country’s resilience amid high global economic uncertainty. The lowest rate documented this year is from January to April, where the rate stayed consistent of 4,25%.
Accordingly, the decision to keep BI rate at 5,75% was induced by slow-moving balance of trade or nation’s net export within the third quarter economic performance in 2018. The cutbacks of net export arised among nation’s superior commodities, such as agricultural products and mining. Those topnotch exports tend to decrease in price and suppress nation’s export. The nation’s import growth increasingly burdened with Indonesia’s current position as net oil importer in the middle of the rising price of oil. Nevertheless, the central bank still sees constant consumption within the society supported by positive purchasing power and high consumer trust.
Therefore, Bank Indonesia will keep track on stabilizing exchange rate corresponds to the fundamental value, and consistently preserving market mechanism promoted with attempts to develop the nation’s financial market. Henceforth, the rate policy will shield rupiah volatility along with the adequacy of liquidity in the market preventing any risk of macroeconomics stability and financial systems.
Sources:
Bisnis Indonesia
CNBC Indonesia
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