TEMPO.CO, Jakarta - The Financial Services Authority's (OJK) board of commissioners' chairman Muliaman D. Hadad said Bank Indonesia's 7-day Repo Rate still has room for correction. The rate is currently at five percent.
"I think with the lower inflation rate, the &-day Repo Rate can still be lowered," he said in Jakarta Thursday, October 20.
Today's inflation rate, Hadad said, is will at 4 plus-minus 1 percent. Meanwhile, bank interest rates are in a downtrend, as a way to push credit growth.
Bank Indonesia (BI) will announce the results of its Board of Governors (RDG) monthly meeting today, Thursday, October 20. The central bank is expected to keep the 7-Days Repo Rate at 5.0 percent.
The projection is based on, among other, the unconfirmed plan for an electricity subsidy cut in the 2017 State Budget Draft. Currently, the draft is still being discussed by the government and the DPR, and the decision will be made in late October.
"This is important, a certainty about electricity subsidy cut will affect the inflation outlook for next year, and the central bank's interest rate policy," economist Josua Pardede told Tempo Thursday.
Josua said BI is also likely to have a closer look at Indonesia's third-quarter GDP and monitor's the Fed Fund Rate, which may affect the exchange rate.
GHOIDA RAHMAH
