Bank Indonesia decided to hold the key interest rate (BI rate) at 7.50 percent in October, with the Lending Facility and Deposit Facility rates kept at 7.50 percent and 5.75 percent, respectively. This level is expected to help control inflation at 4.5±1 percent in 2014 and 4.0±1 percent in 2015, as well as to reduce the current account deficit to a more sustainable level. Despite stable domestic conditions, Bank Indonesia sees risks: contagion risk stemming from US monetary tightening and possible higher subsidized fuel prices.

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Untuk memperkuat basis investor domestik dan memenuhi pembiayaan APBN-P 2014, pemerintah Indonesia kembali menawarkan Obligasi Negara Ritel Indonesia (ORI). Ini adalah kali ke-11, pemerintah menerbitkan ORI sejak obligasi tersebut diluncurkan pada tahun 2006. ORI berseri ORI011 tersebut mulai ditawarkan pada 1-16 Oktober 2014. Tingkat  kupon yang ditawarkan ORI011 sebesar 8,5% dengan tenor selama tiga tahun. Minimum pemesanan yang diperbolehkan adalah Rp5 juta sementara maksimum pemesanan adalah Rp3 miliar per individu.

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Amid political uncertainty and a looming increase in US interest rates, Indonesian stocks and the rupiah exchange rate weakened considerably in the past week. Market participants are increasingly concerned about the situation in Indonesia’s parliament where a majority of political parties - named the Merah-Putih coalition (led by defeated presidential candidate Prabowo Subianto) - is expected to undermine president-elect Joko Widodo’s reform programs as well as the democratic foundations of the country.

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The central bank of Indonesia (Bank Indonesia) released a press statement on Wednesday evening (01/10) in which it set out its view on the country’s trade balance and inflation after the latest economic data had been released by Statistics Indonesia (abbreviated BPS) earlier on the day. Based on information of BPS, Indonesia’s September inflation was relatively low at 0.27 percent month-to-month (m/m), while the August trade balance swung back into a deficit at USD $318.1 million.

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