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Today's Headlines BI Rate

  • Slowing Economic Growth: What about Indonesia's Property Sector in 2014?

    Opinions about the growth prospects of Indonesia's property sector in 2014 have turned rather negative amid the country's slowing economic expansion, tighter monetary policy (mortgage restrictions and higher down payment rules), the depreciating rupiah and uncertainties about the country's legislative and presidential elections in mid-2014. In 2012 and the first half of 2013, Indonesia's property sector had been investors' darling showing spectacular growth amid a booming economy, high housing demand and a low interest environment.

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  • In Anticipation of Tapering, Bank Indonesia May Raise its BI Rate Again

    In Anticipation of Tapering, Bank Indonesia May Raise its BI Rate Again

    Several analysts expect that the central bank of Indonesia (Bank Indonesia) will raise its key interest rate (BI rate) again in the first Semester of 2014 in order to anticipate the winding down of the Federal Reserve's monthly USD $85 billion stimulus program (quantitative easing). Currently, the BI rate is set at 7.50 percent but analysts say that the market should be prepared for a hike to 8.0 percent in the first half of 2014. Between June and November 2013, Bank Indonesia has already raised its benchmark interest rate from 5.75 to 7.50 percent.

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  • Gaikindo Targets 10% Car Sales Growth in Indonesia for 2014

    Gaikindo Targets 10% Car Sales Growth in Indonesia for 2014

    The Association of Indonesian Automotive Manufacturers (Gaikindo) expects Indonesia's car sales to increase by ten percent to 1.3 million sold vehicles for the year 2014. Growth in car sales will be particularly supported by sales in the Jakarta region, Indonesia's most densely populated area and which constitutes the country's economic and political center. In 2013, Indonesia will most likely set a new car sales record. Supported by popular low cost green car sales (LCGCs), total sales are expected to reach 1.2 million units in 2013.

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  • A Small Rebound Seen in Indonesia's Cement Consumption in October

    A Small Rebound Seen in Indonesia's Cement Consumption in October

    After experiencing slowing growth in recent months, Indonesian cement sales in October 2013 increased 7.9 percent (year-on-year) to 5.58 million metric tons according to data from the Indonesia Cement Association (ASI). As such, cement sales rebounded from the 5.3 percent growth (yoy) in the previous month. The October growth rate was mainly caused by increased cement demand from islands other than Java. In particular, demand from Sumatra rose significantly. Indonesia's second most populous island bought 1.15 million tons of cement.

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  • Fitch Ratings Affirms Indonesia's Sovereign Credit Rating at BBB-/Stable

    Fitch Ratings Affirms Indonesia's Sovereign Credit Rating at BBB-/Stable

    Fitch Ratings, one of the three major global rating agencies, affirmed Indonesia's sovereign credit rating at BBB- with a stable outlook. In a press release, the rating agency mentioned four key factors that led to the affirmation of the sovereign rating. These are: good policy management by Indonesia's central bank (Bank Indonesia) and government amid external pressures, relatively high economic growth, prudent fiscal management (resulting in low public debt), and a strong banking sector (confirmed by multiple stress tests).

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  • QE3 and BI Rate Concerns Impact on Indonesia's Stock Index and Rupiah

    QE3 and BI Rate Concerns Impact on Indonesia's Stock Index and Rupiah

    Concerns about the looming end of the Federal Reserve's monthly USD $85 billion stimulus program (known as quantitative easing or QE3) in combination with the deteriorating domestic economy of Indonesia has caused Indonesia's benchmark stock index (IHSG) to plunge 1.95 percent in the first trading session of 13 November 2013. The Indonesian rupiah exchange rate depreciated 0.28 percent to IDR 11,600 according to Bloomberg. These developments happen one day after the decision of Indonesia's central bank to raise the BI rate to 7.50 percent.

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  • Bank Indonesia Expects Indonesia's Economy to Grow 5.7% in 2013

    Agus Martowardojo, Governor of Indonesia's central bank (Bank Indonesia), stated that the country's economy is expected to grow 5.7 percent in 2013. Bank Indonesia believes GDP growth in the fourth quarter of 2013 to fall below the growth figure realized in Q3-2013 (5.62 percent). Martowardojo said that the government needs to continue measures to improve the country's exports, while trying to curtail imports of oil and gas as domestic demand for fuels remained high, even after the increase in prices of subsidized fuels in June 2013.

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  • Indonesia's Economic Growth (GDP) Continues to Slow Down in Q3-2013

    Today (06/11), Statistics Indonesia announced that Indonesia's gross domestic product (GDP) expanded 5.62 percent in the third quarter of 2013 from the same period in 2012. The result implies the continuation of Indonesia's slowing economic growth as Q3-2013 constitutes the fifth consecutive quarter in which the country recorded slowing economic growth. Previously, the government had already expressed its concern about the GDP growth figure in Q3-2013 because the current high inflation rate curbs household consumption.

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  • Bank Indonesia: Indonesia's October Inflation Likely to Fall Below 0.26%

    Perry Warjiyo, Deputy Governor of Indonesia's Central Bank (Bank Indonesia), expects that the inflation rate in October 2013 will fall below 0.26 percent (which is the average October inflation rate since 2007). Warjiyo said that a survey of Bank Indonesia indicated that up to the third week of October, inflation had only reached 0.06 percent. Low inflation - or preferably deflation - is needed to curb Indonesia's current high inflation rate. In September 2013, annual inflation was recorded at 8.40 percent.

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  • Moody's: Despite Some Risks Outlook for Indonesia's Economy Still Stable

    Moody's Investors Service, one of the big credit rating agencies, stated in its 'Credit Analysis: Indonesia' report that - despite the ongoing current account deficit (which is considered to be structural) and a relatively shallow and volatile domestic capital market (which contributes to Indonesia’s reliance on external funding) - the agency is positive about Indonesia's outlook due to its growth prospects, narrow fiscal deficits and low public debt. Indonesian government bonds are rated at Baa3, which is Moody's lowest investment-grade status.

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Latest Columns BI Rate

  • Bank Indonesia's 7.50% Policy Rate in Line with Current Economic Conditions

    Bank Indonesia's 7.50% Policy Rate in Line with Current Economic Conditions

    In Bank Indonesia's board of governors' meeting, which was held on Thursday (12/12), it was decided to maintain the country's benchmark interest rate (BI rate) at 7.50 percent. This decision was in line with market expectation but was unable to support the Jakarta Composite Index and rupiah exchange rate. The lending facility and deposit facility interest rates were also maintained at 7.50 percent and 5.75 percent respectively. Bank Indonesia decided not to change the rate as Indonesia's inflation outlook for 2014 is still within target.

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  • Sales of Ceramics in Indonesia Expected to Plunge 10% in 2014

    Sales of Ceramics in Indonesia Expected to Plunge 10% in 2014

    With slowing economic growth and a stricter monetary policy approach of the central bank, Indonesia's ceramic industry is expected to record slowing growth in 2014. This year, the country's ceramic sales are projected to amount to 400 million square meters (m²). About 12 percent of this amount is exported to countries abroad. However, in 2014, sales are expected to plunge by 5 to 10% to 360-380 million m². A weakening rupiah and slowing property sector, which accounts for significant ceramic demand, are the major causes of the decline.

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  • Investors Concerned Ahead of Bank Indonesia Board of Governor's Meeting

    Both the Jakarta Composite Index (Indonesia's benchmark stock index) and the Indonesia rupiah exchange rate are under pressure this morning as market participants are waiting for results of the central bank's Board of Governor's meeting that is held today (12/12) in Jakarta. Speculation has emerged that Indonesia's central bank (Bank Indonesia) will raise its benchmark interest rate (BI rate) one more time in 2013 in order to combat the country's current account deficit as well as mitigate the impact of a possible winding down of QE3.

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  • Despite Unchanged BI Rate, Indonesia's Stock Index and Rupiah Down

    Although Indonesia's benchmark interest rate (BI rate) was kept at the level of 7.5 percent (in line with market expectation) today (12/12), it was not able to support the country's stock index. Indonesia's IHSG index fell 1.39 percent to 4,212.22 points. The index was negatively impacted by Asian stock indices that were down due to concerns about the looming end of the Federal Reserve's quantitative easing program. This made investors' positive reaction to the BI rate of temporary nature. Weak openings in Europe increased downward pressure.

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  • Business as Usual in Indonesia: a Day of Gain is Followed by a Day of Loss

    Business as Usual: a Day of Gain is Followed by a Day of Loss

    One of the main problems of Indonesia's benchmark stock index (IHSG) is the profit taking that immediately happens after a day of strong growth. On Wednesday (11/12), the IHSG index was plagued by profit taking since the start of the first trading session. Moreover, the index was impacted by mostly falling Asian stock indices as well as the Indonesia rupiah exchange rate which went above the IDR 12,000 per US dollar level again. The only support the IHSG received was just before its closing when European indices opened up.

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  • Indonesia Rupiah Exchange Rate: Fluctuating Performance on Monday

    After appreciating on Monday morning (09/12), the Indonesia rupiah exchange rate started to weaken against the US dollar in the afternoon. At 15:10:29 local Jakarta time, the rupiah stood at IDR 11,970 per US dollar in the Bloomberg Dollar Index, a 0.05 percent depreciation from the start of the day. The rupiah exchange rate is fluctuating due to positive sentiments caused by Indonesia's October trade surplus as well as China's low inflation and negative sentiments brought on by the looming end of the Federal Reserve's quantitative easing program.

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  • Monthly Economic Review: Overview of Indonesia's Macroeconomic Data

    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 November 2013 edition, a number of important issues that are monitored include Indonesia's inflation rate, the trade balance, the current account deficit, the IDR rupiah exchange rate, and gross domestic product (GDP) growth. Below is an excerpt of the newsletter:

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  • Indonesia Rupiah Exchange Rate: How Will Bank Indonesia Respond?

    In the morning of Thursday (05/12), Indonesia's rupiah exchange rate depreciated beyond the psychological level of IDR 12,000 per US dollar. In the Bloomberg Dollar Index, the rupiah fell 0.2 percent to IDR 12,011 as of 09:19:49. The main factor behind this decline is market participants' concerns about the end of the Federal Reserve's monthly USD $85 billion bond buying program. It is increasingly speculated that the winding down of this program will start sooner than expected.

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  • Indonesia's Jakarta Composite Index (IHSG) and Rupiah Continue Decline

    Indonesia's Jakarta Composite Index (IHSG) and Rupiah Continue Decline

    The continued presence of negative market sentiments made it impossible for Indonesia's Jakarta Composite Index (IHSG) to rebound. The looming end of the FED's quantitative easing program - which may be wound down sooner than expected - is a big cause for concern. The depreciating Indonesia rupiah exchange rate intensifies these concerns, particularly regarding companies that have exposure to volatile US dollar movements. Furthermore, investors are waiting for further US economic data as well as for Bank Indonesia's next meeting.

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  • Indonesia Inflation Update: Consumer Price Index Moving Sideways

    Indonesia Inflation Update: Consumer Price Index Moving Sideways

    The inflation rate of Indonesia rose slightly in November 2013 (month-to-month) and confirms estimations that inflation in Southeast Asia's largest economy is under control after having accelerated sharply due to the introduction of higher subsidized fuel prices June 2013. In recent months, inflation moved sideways and is expected to ease considerably in the first quarter of 2014. Indonesia's consumer price index rose 0.12 percent in November due to rising electricity, processed foods and health care costs.

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