Bank Indonesia continues its monetary easing stance

In line with expectations, Bank Indonesia has continued with its monetary easing by keeping its benchmark sevenday repo rate at 4.75 percent on January 19 to maintain stability amid growing global uncertainty. The move anticipated a change in direction of United States economic policies brought about by president-elect Donald Trump, who will assume his new duties on January 20. BI spokesman Tirta Segara said that since the new US president would likely adopt aggressive economic policies, particularly to speed up the US’ economic recovery, the Federal Reserve might increase its fund rate several times this year. This could negatively affect the cost of borrowing, as well as the stability of the rupiah. Internally, the move also aims at tackling rising inflation, triggered by some recent measures, such as a cut in electricity subsidies and higher administration fees for vehicle ownership documents, said BI economic and monetary policy director Juda Agung.

Keep reading