TEMPO.CO, Jakarta - 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.
He 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.
Josua said that banks also consider the high credit risk. "So they tend to be more prudent in lending, in addition to the demand for loans also declined."
GHOIDA RAHMAH
