BI Projected to Reduce Interest Rate

TEMPO.CO, Jakarta - Rangga Cipta, economist from Samuel Sekuritas, estimated that Bank Indonesia (BI) will reduce its BI interest rate at the end of this year by 50 points amid the dilemma faced by the bank.

“We’re still predicting BI rate decreased by 50 points this year even though we realize that rupiah depreciation may still continue amid the global uncertainty,” he said on Monday.

According to Rangga, the Fed’s decision to postpone the increase of interest rate give many opportunities for BI to focus on domestic issues, while maintaining high interest rate amid a decrease in loan growth makes BI revise GDP growth target to around 5 to 5.4 percent per year.

“This is the central bank’s dilemma that offers tougher challenges,” said Rangga.

BI eventually revised the GDP growth target, even though there was no statement on the decrease in loan growth target that is now at 15 percent to 17 percent per year.

According to Rangga, taking loan growth into account, BI should realize that liquidity stimulus is needed to accompany policies in macroeconomy, which recently reached a low five-percent target. This means growth must be 5.1 percent per year on average for the remaining quarters.

BISNIS.COM