BI May Cut Interest Rate

TEMPO.CO, Jakarta - Bank Indonesia (BI) said it would be apply accommodative monetary policies, in line with low inflation and efforts to boost domestic economic growth. The statement implies that the central bank may cut its benchmark interest rate sometime in the near future.

BI Governor Perry Warjiyo said that the accommodative policy will be taken with regards to a number of developments, including global financial market conditions and the external stability of the state's economy.

BI also continues to carry out friendly macro-prudential policies through various instruments, including the financing-to-funding ratio (FFR).

"We will also continue to encourage financial market penetration to support economic financing," Perry said on June 11.

Meanwhile, Bahana Sekuritas' chief economist Putera Satria Sambijantoro said that now is the perfect time for BI to cut interest rates. Supporting factors include Indonesia's credit rating upgrade from S&P, signs that the Fed will cut their interest rates, the weakening US dollar, low US Treasury yields, low oil prices, and the interest rates cut by a number of central banks in Asia.

On the other hand, Satria said that an interest rate cut by BI would depend on momentums, thereby allowing the rupiah's exchange rate to remain stable.

BISNIS.COM