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Today's Headlines BI Rate

  • Moody’s & JP Morgan Positive about Indonesia’s Fuel Price Hike

    International credit rating agency Moody's Investors Service is positive about the subsidized fuel price hike that was conducted by the government of Indonesia on Monday (17/11) as it shows commitment of the government to implement reforms that support the strengthening of the economy, such as curbing Indonesia’s fiscal and current account deficits. Moody’s estimates that these developments are positive for the country’s sovereign rating (now at Baa3/stable) as well as for state-owned energy firm Pertamina (Baa3/stable).

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  • News Stories Indonesia: Reactions to the Subsidized Fuel Price Hike

    Main news headlines in Indonesia still cover the higher subsidized fuel prices implemented starting from the early hours of Tuesday (18/11). The previous evening, Indonesian President Joko Widodo had announced that prices of subsidized gasoline and diesel were to be raised by over 30 percent, immediately leading to long queues at local gas stations as well as public outcry as people’s purchasing power will diminish. Analysts and economists, however, agree that this move is correct and can lead to structurally higher GDP growth.

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  • Bank Indonesia's Interest Rates Up to Combat Inflation after Fuel Price Hike

    The central bank of Indonesia decided to raise its key interest rate (BI rate) by 25 basis points from 7.50 percent to 7.75 percent on Tuesday (18/11) in a response to the subsidized fuel price hike. One day earlier, Indonesian President Joko Widodo had announced that prices of subsidized gasoline and diesel were to be raised by more than 30 percent starting from midnight in an effort to create more fiscal space for economic and social development. This move is expected to result in accelerated inflation in Southeast Asia’s largest economy.

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  • Fuel Subsidies Indonesia: Central Bank to Hold Extraordinary Meeting

    Indonesian President Joko Widodo announced yesterday evening (17/11) that prices of subsidized fuels will be raised by over 30 percent starting from midnight in an effort to reduce state expenses on non-productive matters. Low-octane gasoline (premium) will now cost IDR 8,500 (USD $0.70) per liter, while diesel now costs IDR 7,500 (USD $0.62) per liter. This sudden announcement immediately led to long queues at local gas stations as people still had three hours to enjoy cheaper fuel rates.

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  • Fitch Affirms Indonesia’s BBB-/Stable Outlook Investment Grade Status

    Global rating agency Fitch Ratings affirmed Indonesia’s Sovereign Credit Rating at BBB-/stable outlook (investment grade status) on Thursday (13/11). This rating affirmation by the credit rating agency can be regarded as international recognition of prudent fiscal policy in Southeast Asia’s largest economy amid global uncertain times. Policy responses pursued by both the government and central bank of Indonesia have been well received by Fitch Ratings and managed to safeguard economic stability.

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  • Update Indonesia: Interest Rate, Fuel Subsidies & Current Account Deficit

    The central bank of Indonesia (Bank Indonesia) announced today (after the Board of Governors’ meeting) that it keeps the benchmark interest rate (BI rate) at 7.50 percent. The lending facility rate and the deposit rate are maintained at 7.50 percent and 5.75 percent, respectively. Agus Martowardojo, Governor of Bank Indonesia, said that interest rates were maintained as the country’s current account deficit narrowed to 3.07 percent of gross domestic product (GDP) in the third quarter of 2014.

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  • Forecast: Bank Indonesia Expected to Keep Key Interest Rate at 7.5%

    The central bank of Indonesia is expected to keep its key interest rate (BI rate) at 7.50 percent at the next Board of Governors’ meeting (scheduled for Thursday 13 November 2014) in anticipation of accelerated inflation triggered by higher prices of subsidized fuels. The Indonesian government plans to raise prices of subsidized gasoline and diesel before the end of the month in an attempt to curb the country’s wide current account deficit and reallocate government funds to more structural or productive activities than fuel consumption.

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  • Economy of Indonesia: Sacrificing GDP Growth for Financial Stability

    The economy of Indonesia is expected to slow further in the next six months ahead according to Standard Chartered Bank economist Fauzi Ichsan. As the US Federal Reserve is expected to raise its key interest rate next year, emerging economies - including Indonesia - will be affected by capital outflows. Moreover, China (one of the most important trading partners of Indonesia) has been experiencing a period of declining economic growth, thus leading to weak demand for Indonesian commodities.

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  • Market Wants Jokowi to Announce Composition New Indonesian Cabinet

    It remains unknown whether President Joko Widodo (Jokowi) and Vice President Jusuf Kalla will announce the names of the ministers inside the new cabinet today. On Wednesday (22/10) it was reported that a number of ministerial candidates failed to pass the screening of the Corruption Eradication Commission (KPK) and the Financial Transaction Reports and Analysis Center (PPATK), which made Jokowi decide to seek for additional candidates. The market, however, would like to know the composition of the cabinet as soon as possible.

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  • Indonesia Investments' Newsletter of 12 October 2014 Released

    On 12 October 2014, Indonesia Investments released the latest edition of its newsletter. This free newsletter, which is sent to our subscribers once per week, contains the most important news stories from Indonesia that have been reported on our website in the last seven days. Most of the topics involve economic topics such an outlook for GDP growth, the benchmark interest rate, the equity market, car sales, the coffee industry, the Giant Sea Wall Jakarta, and more.

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Latest Columns BI Rate

  • Bank Indonesia Keeps Benchmark Interest Rate (BI Rate) at 7.50%

    Bank Indonesia Keeps Benchmark Interest Rate (BI Rate) at 7.50%

    On Thursday 12 June 2014 it was decided at the central bank’s Board of Governors’ Meeting to maintain the country’s benchmark interest rate (BI rate) at 7.50 percent, with the Lending Facility rate and Deposit Facility rate held at 7.50 percent and 5.75 percent, respectively. This decision is consistent with ongoing efforts to steer inflation back towards its target corridor of 4.5±1 percent in 2014 and 4.0±1 percent in 2015, as well as to reduce Indonesia’s current account deficit to a more sustainable level.

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  • Indonesian Rupiah Exchange Rate Update: Slightly Appreciating

    The Indonesian rupiah exchange rate appreciated slightly on Wednesday (11/06). According to the Bloomberg Dollar Index, the currency of Southeast Asia’s largest economy appreciated 0.04 percent to IDR 11,810 per US dollar. Reuters reported that the euro zone's monetary easing in combination with the recent improvement in China's economy offset the impact of higher US yields on Asia. However, investors are still waiting for several data, including the BI interest rate, the Eurozone’s industrial production, and US retail sales.

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  • Bank Indonesia’s Key Interest Rate Expected to Be Kept at 7.50%

    Bank Indonesia’s Key Interest Rate Expected to Be Kept at 7.50%

    Although the business community in Indonesia requests that the country’s benchmark interest rate (BI rate) is lowered at Bank Indonesia’s next Board of Governor’s Meeting (scheduled for Thursday 12 June 2014), it is highly unlikely that the central bank will alter its BI rate which currently stands at 7.50 percent. The relatively high BI rate curbs business expansion and therefore limits higher economic expansion in Indonesia. However, several factors justify the continuation of the BI rate at 7.50 percent.

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  • Update Indonesian Car Industry: Car Sales Declined 8% in May 2014

    Update Indonesian Car Industry: Car Sales Declined 8% in May 2014

    Car sales in Indonesia declined 8 percent to 98,198 units in May 2014 from 106,811 units in the previous month. The Indonesian Automotive Industry Association (Gaikindo) said that the decline was the direct consequence of several public holidays (International Labour Day and the commemorations of Buddha’s birthday as well as ascensions of Prophet Muhammad and Jesus Christ). These holidays caused a lower car production rate and a reduced number of car deliveries to wholesale dealers.

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  • Update Indonesian Macroeconomy; ICRA Indonesia's Monthly Review

    Update Indonesian Macroeconomy; ICRA Indonesia's Monthly Review

    ICRA Indonesia, an independent credit rating agency and subsidiary of ICRA Ltd. (associate of Moody's Investors Service), publishes a monthly newsletter which provides an update on the financial and economic developments in Indonesia of the last month. In the April 2014 edition, a number of important topics that are monitored include Indonesia's inflation rate, the trade balance, the BI rate, the IDR rupiah exchange rate, and gross domestic product (GDP) growth. Below is an excerpt of the newsletter:

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  • Indonesian Rupiah Appreciates on Bond Sale and Current Account Data

    Indonesian Rupiah Appreciates on Bond Sale and Current Account Data

    While most emerging Asian currencies fell, the Indonesian rupiah exchange rate appreciated 0.08 percent to IDR 11,523 per US dollar based on the Bloomberg Dollar Index on Monday (12/05). The depreciating Chinese yuan, after its central bank set the midrate at its lowest level in eight months, put pressure on other Asian currencies. Today, Indonesia's Finance Ministry sold IDR 10 trillion rupiah (USD $867 million) of bonds, higher than the indicative target of IDR 8 trillion rupiah. Meanwhile, Indonesia’s two-year bonds gained.

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  • Small Loss for the Benchmark Indonesian Stock Index on Thursday

    Contrary to most Asian stock indices, the benchmark stock index of Indonesia (known as IHSG or the Jakarta Composite Index) declined on Thursday (08/05). Positive sentiments that were provided by the BI rate (Indonesia's benchmark interest rate) that was kept at 7.50% in today's Bank Indonesia Board of Governors' Meeting, and China's higher-than-expected trade balance in April 2014 (USD $18.5 billion), were offset by the depreciating rupiah exchange rate and foreign net selling of Indonesian stocks. The IHSG fell 0.02 percent to 4,860.89 points.

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  • Official Press Release Bank Indonesia: BI Rate Maintained at 7.50%

    Official Press Release Bank Indonesia: BI Rate Maintained at 7.50%

    The central bank of Indonesia (Bank Indonesia) decided at today’s Bank Indonesia Board of Governors’ Meeting, convened on 8 May 2014, to maintain the country's benchmark interest rate (BI rate) at 7.50 percent, with the Lending Facility rate and Deposit Facility rate held at 7.50 percent and 5.75 percent respectively. This policy is consistent with efforts to steer the rate of inflation towards its target corridor of 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.

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  • Jakarta Composite Index Climbs 0.57%; Indonesian Rupiah Down 0.51%

    Jakarta Composite Index Climbs 0.57%; Indonesian Rupiah Down 0.51%

    Completely opposite to our expectations, the benchmark stock index of Indonesia (known as the Jakarta Composite Index or IHSG) managed to climb 0.57 percent to 4,862.02 points on Wednesday (07/05). The gain was unexpected as there were no clear factors that could provide positive market sentiments. Moreover, today's Asian stock indices were mostly down. Coincidence or not, tomorrow Bank Indonesia will announce whether its benchmark interest rate (BI rate) - currently set at 7.50 percent - will be changed or maintained.

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  • What about Indonesia's Economic Growth in 2014? Growing or Slowing?

    After Statistics Indonesia (BPS) had announced on Monday (05/05) that Indonesia's gross domestic product (GDP) grew by 5.21 percent year-on-year (yoy) in the first quarter of 2014 (considerably below analysts' projections of around 5.6 percent), concerns have risen about the country's economic expansion for the remainder of the year. The government of Indonesia targets a GDP growth rate of between 5.8 and 6.0 percent (yoy). However, several international institutions do not agree with this optimistic target.

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