Bank In­done­sia de­cides to hold BI rate steady at 5.75pc

The Pak Banker - - Front Page -

JAKARTA

Bank In­done­sia in the Board of Gov­er­nors' meet­ing to­day de­cided to hold the BI rate steady at 5.75%. The cur­rent pol­icy rate is termed con­sis­tent with in­fla­tion fore­cast, which is expected to re­main low and con­tained within its tar­get range of 4.5%±1% in 2012 and 2013.

Bank In­done­sia says in line with the dy­nam­ics of the econ­omy and some pol­icy mea­sures that have been taken, ex­ter­nal im­bal­ances have started to im­prove, with de­clin­ing cur­rent ac­count deficit and the over­all bal­ance of pay­ments that have turned to sur­plus. Ru­piah also moved ac­cord­ing to mar­ket con­di­tion, with abated de­pre­ci­at­ing pres­sure.

Mean­while, In­done­sia's eco­nomic growth re­mains sound, al­though slowed slightly as ex­ports fell, re­flect­ing a con­tin­ued slow­down in the global econ­omy. Bank In­done­sia will continue to fo­cus on poli­cies to man­age ex­ter­nal bal­ance to a sus­tain­able level while also pro­vid­ing sup­port for eco­nomic growth. Bank In­done­sia will also continue to strengthen co­or­di­na­tion with the Gov­ern­ment to main­tain macroe­co­nomic sta­bil­ity and sus­tain­able eco­nomic growth.

Bank In­done­sia sees In­done­sia's eco­nomic growth re­mains sound, al­though slowed slightly. In the Q3-2012, In­done­sia's econ­omy charted 6.2% growth, slighlty lower than ear­lier fore­cast, re­flect­ing a con­tin­u­ing slow­down in ex­ports. Buoy­ant do­mes­tic de­mand, mainly pri­vate con­sump­tions and in­vest­ment, con­tin­ued to un­der­pin growth. Go­ing for­ward, In­done­sia's eco­nomic growth is expected to pick up sup­ported by strong pri­vate con­sump­tion and in­vest­ment. Ex­ports is also expected to per­form bet­ter, sup­ported by im­prove­ment in some of In­done­sia's main trad­ing part­ner coun­tries, al­though re­mains over­shad­owed by un­cer­tainty in the global econ­omy. With that con­di­tion, In­done­sia's eco­nomic growth in 2012 is expected to arrive at 6.3% and pick up to 6.3%-6.7% in 2013.

Ex­ter­nal im­bal­ances have im­proved, as expected. Cur­rent ac­counts deficit in the Q32012 went down to 2.4% of GDP from 3.5% of GDP in the Q2-2012. Im­prove­ment in the cur­rent ac­count bal­ance was as­so­ci­ated with bet­ter trade bal­ance, as im­ports fell sharply, es­pe­cially on con­sumer goods, while some non oil and gas ex­ports com­modi­ties such as CPO has started to post pos­i­tive growth. Cap­i­tal and fi­nan­cial ac­counts posted a higher sur­plus, mainly driven by For­eign Di­rect In­vest­ment (FDI), and bring the over­all bal­ance in Q3-2012 to sur­plus. Go­ing for­ward, the over­all bal­ance of pay­ments in Q42012 is expected to record higher sur­plus, sup­ported by lower cur­rent ac­count deficit and in­creas­ing sur­plus in the cap­i­tal and fi­nan­cial ac­count , mainly in the form of FDI.

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