TEMPO.CO, Jakarta - Bank Indonesia (BI) has decided to keep the 7-day reverse repo (7DRR) benchmark interest rate at 4.25 percent. The deposit facility rate is also unchanged at 3.50 percent and the lending facility is unchanged at 5.00 percent.
"The decision is in line with the central bank and the government's goal to maintain the stability of the domestic macroeconomic and financial system, whilst taking into account the dynamics of the global and domestic economy," BI's head of the Economic and Monetary Policy Department Dody Budi Waluyo said yesterday, Dec. 13.
Another reason to keep the 7DRR at its current level is the estimate that The Fed Rate hike plan has no risk against Indonesia's economic recovery.
Read: Bank Indonesia to Cut Inter - Bank Transaction Fees
On Wednesday, The Fed raised its benchmark interest rate by 0.25 percent to 1.25-1.50 percent. The Fed also projected three further increases in 2018 and 2019, before a long-term rate of 2.8 percent is reached.
Bank Indonesia had said that a Fed Rate hike will not jeopardize the stability of the domestic market. "We believe that stability will remain intact in this final period," BI Governor Agus Martowardojo said.
MNC Securities' analyst Edwin Sebayang said Indonesia's investment climate remains prospective despite the Fed Rate hike, which he said the market had anticipated ahead.
"Next year they will raise it twice more, I can say that it will not affect the market in Indonesia," he said.
Meanwhile, Indonesia Stock Exchange director Samsul Hidayat said the Fed Rate hike will affect global investment activities, because the cost of capital will increase thus reducing operational and investment activities.
He said that the government needs to maintain economic stability to secure investments.
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