MACROECONOMIC ANALYSIS SERIES: BI Board of Governor Meeting, January 2020

  • Global investors are shifting their portfolio towards emerging countries, including Indonesia. Accompanied by relatively stable and rather well-performed domestic economic conditions,  amidst the global economic slowdown and rising uncertainties, capital flows are surging massively to Indonesia. The government’s commitment in fiscal discipline and managing the current account deficit well below the 3% threshold have raised the confidence of investors toward the Indonesian economy. BI’s signal on allowing some appreciation of IDR has also pushed the investors’ appetite in the short run.…
    23 Jan
    23 Jan
  • Throughout 2019, we observe an overall low inflation landscape, as made apparent by its inflation rate being the lowest in 20 years (2.72%). The most important contributor of such decrease in inflation is the administered inflation, for which we have observed a decrease of 2.85 bps from last year. In addition, core inflation rate is also 0.05 bps lower than the preceding year, signifying a rather contracted economic landscape.…
    07 Jan
    07 Jan
  • Pada  awal   Desember  2019,  di  bawah   payung  hukum  Peraturan  Menteri  Pertanian (Permentan) Nomor 38 Tahun 2018, Bulog mengumumkan rencana kebijakan pemusnahan cadangan beras pemerintah  (CBP)  sebesar 20.000 ton.  Kebijakan tersebut menambah rentetan kebijakan pelepasan beras yang sebelumnya terjadi pada Juli 2019 dengan nilai pelepasan  sebesar  50.000  ton.   Permasalahan   penurunan  mutu   serta   keterbatasan kapasitas gudang penyimpanan beras merupakan penyebab dibalik kebijakan tersebut.…
    27 Dec
    27 Dec
  • The latest picture of inflation confirms that 2019 inflation will remain low. We also see that the 2020 inflation to be within BI’s lower goal of 3.0±1%, given the signs towards no-significant change in 2020 demand. BI has started its accommodative stance in July 2019 and has cut its policy rates four times. The easing trend needs to take a break for now since BI would like to accumulate more international reserves amid the short-term consolidation in the global financial market. Liquidity in the banking system has increased slightly. However, the business activities have not fully responding as production has not picked up. We could see a slight increase in the credit growth starting from 2020Q3.…
    18 Dec
    18 Dec
  • Secara umum, bulan November 2019 sesuai dengan prediksi kami sebelumnya bahwa bulan ini akan mengalami inflasi rendah. Inflasi umum (MoM) hanya sebesar 0,14%, meskipun angka ini meningkat dari bulan sebelumnya yang hanya mencapai angka 0,02%. Besaran inflasi ini lebih didorong oleh inflasi kelompok pengeluaran barang bergejolak. Inflasi inti yang menurun menandakan adanya penurunan daya beli, yang juga tercermin dari menurunnya tingkat inflasi inti (YoY) ke angka 3,08%. Hal positif lainnya yang dapat diamati adalah adanya kecenderungan penurunan inflasi (YoY) kelompok barang yang diatur pemerintah sejak bulan Mei tahun ini. Kami melihat bahwa perbaikan infrastruktur logistik dan sistem distribusi berperan dalam penurunan inflasi ini. Melihat laju inflasi sampai bulan November, kami memperkirakan nilai inflasi YoY pada akhir tahun akan lebih rendah dari perkiraan sebelumnya sebesar 3,0-3,4 persen, meskipun tingkat konsumsi akan kembali mengalami peningkatan pada bulan Desember – khususnya dengan adanya momentum libur natal dan tahun baru.…
    17 Dec
    17 Dec
  • Recent macro indicators suggest that the slowing down trend of Indonesian economy, both in demand and production, still continues. BI has started its accommodative stance in July 2019 and has cut its policy rates four times. Relatively improving external conditions and the potential risk of slowing down economic growth below its potential justify the easing stance.…
    21 Nov
    21 Nov
  • Since March 2019, the US bonds market has recorded an inverted yield curve, meaning that the yields of short-term bonds have surpassed those of long-term bonds. This condition indicates a negative perception of the US’s economic performance as the inverted slope of the yield curve is very frequently correct in predicting the occurrence of recession in the near future. Even though the transmission channel of the potential global shocks to the domestic economy by capital flow channel would not yet clearly materialize in 2020, the rising concern of recession that would take place in US  may spark speculative attacks in the foreign exchange and capital market. The speculative attack will notably affect Indonesia’s financial system by  triggering capital outflows, giving substantial pressure to Rupiah. However, if the government and Bank of Indonesia (BI) could manage expectations of the market, it will drive capital to flow back to Indonesia after the turbulence period ends. We expect BI might, at least, lower the policy rates one more time and then hold it in 2020 until the volatility of Rupiah requires hikes in 2020. The currently ongoing monetary easing will provide some  support for the credit growth in 2020.…
    05 Nov
    05 Nov
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