JAKARTA: Indonesia’s central bank kept its policy rate unchanged on Thursday as expected, as it looks to maintain stability in the struggling rupiah following an unexpected spike in global volatility. Here is the official translation of the Bank Indonesia statement, with some editing by Reuters. The original was in Indonesian: The BI Board of Governors agreed on 14th and 15th February 2018 to hold the BI 7-day Reverse Repo Rate at 4.25 percent, while maintaining the Deposit Facility and Lending Facility rates at 3.50 percent and 5.00 percent respectively, effective 19th February 2018. The policy is consistent with efforts to maintain macroeconomic and financial system stability while supporting the domestic economic recovery. Bank Indonesia considers the previous steps taken to ease monetary policy adequate in terms of building domestic economic recovery momentum. Moving forward, Bank Indonesia believes that maintained economic stability will be the backbone of stronger and more sustainable economic growth. Furthermore, Bank Indonesia will continue to monitor the risks, including global risks such as growing uncertainty in the global financial markets owing to anticipation of a higher-than-expected FFR hike, coupled with the rising oil price, as well as the domestic risks linked to ongoing corporate consolidation, a sluggish bank intermediation function and inflation risk. To that end, Bank Indonesia will constantly optimise its mix of monetary, macroprudential and payment system policy to strike an optimal balance between macroeconomic and financial system stability and the current economic recovery. In addition, Bank Indonesia also strengthens policy coordination with the Government to maintain macroeconomic and financial system stability, while enhancing structural reforms. Global economic growth is projected to accelerate in 2018, accompanied by rising international commodity prices. Stronger-than-expected economic gains in advanced and developing economies drives higher global growth. In terms of the advanced economies, increasing investment and consumption on the back of recent tax reforms will edge up the US economy. Consequently, further FFR hikes are anticipated along with the unwinding of the Federal Reserve balance sheet in response to rising inflation approaching the target corridor. Europe’s economy is projected to accelerate on improving exports and increasing consumption and accommodative monetary policy. Furthermore, growth projections in Japan have been revised upwards on robust exports, tax incentives for the corporate sector and accommodative monetary policy. Concerning the developing economies, solid economic growth in China is expected to persist as increasing demand, particularly from advanced countries, drives exports. India’s economy is starting to thrive as the effects of demonetisation and the implementation of the new tax system fade. Consequently, the promising global economic outlook will induce world trade volume and elevate international commodity prices, including oil, in 2018. Indonesia’s economy has continued to show signs of improvement, backed by a more balanced structure. Actual GDP growth hit 5.19 percent (yoy) in the fourth quarter of 2017, up from 5.06 percent (yoy) in the previous period, which is indicative of maintained domestic economic recovery momentum. Solid economic growth is supported by a stronger structure, with investment and exports cited as the main drivers. A relatively high investment growth has reached 7.27 percent (yoy), pushed up by building investment for infrastructure development as well as non-building investment in anticipation of increasing future demand. Meanwhile, the global economic recovery and rising international commodity prices stimulated export growth to the tune of 8.5 percent (yoy). Furthermore, accelerated government spending and stable household consumption backed by controlled inflation has also catalysed national economic growth. By sector, the construction sector, transportation and warehousing as well as information and communication are the main contributors to the flourishing domestic recovery. In contrast, the manufacturing industry remains subdued despite strong performance recorded in several subsectors, including the food and beverages industry, textiles and clothing as well as base metals.
Indonesia records 2.68 percent January inflation using new formula
Indonesia recorded annual inflation of 2.68 percent in January in applying a new formula for calculating its consumer price index...
