MACROECONOMIC ANALYSIS SERIES: BI Board of Governor Meeting, October 2018

  • Rupiah took a paradoxical turn within the last month, where continued rapid depreciation was also followed by second monthly deflation in a row, defying conventional wisdom.  Muted inflation in face of rapid depreciation might be explained by higher interest rate, which slows down the demand for durable goods consumption, and government’s insistence to hold retail fuel price despite higher international crude oil price.  On external side, we still see pressure on Rupiah going forward given persistent current account deficit and continued sign of monetary policy tightening around the world. Given the decrease in inflation, priced-in global shocks in the short run, and potential benefits from the implementation of the negative Tobin tax initiatives,  we argue that holding interest rate on Tuesday may be the best course of action.…
    22 Oct
    22 Oct
  •   Pada bulan September 2018, deflasi tercatat sebesar 0,18% (mtm) atau inflasi sebesar 1,94% (ytd). Deflasi pada bulan September 2018 lebih tinggi dibandingkan deflasi pada bulan Agustus 2018 sebesar 0,05% (mtm). Deflasi bulan September 2018 berbeda dengan inflasi yang terjadi pada bulan September 2017 sebesar 0,13% (mtm). Deflasi ini tidak sesuai dengan prediksi LPEM bulan sebelumnya bahwa diprediksi akan terjadi inflasi rendah pada bulan September 2018 yang didorong oleh efek pengeluaran pendidikan di bulan September 2018. Meskipun pengeluaran pendidikan meningkat di bulan September 2018, besarnya deflasi harga bahan makanan yang di luar ekspektasi mendorong terjadinya deflasi umum.…
    03 Oct
    03 Oct
  • Late August to early September saw rapid USD/IDR depreciation to almost 15,000 level, although the pressure on Rupiah has somewhat receded for now. This sharp Rupiah depreciation and deterioration in market sentiment is caused by external pressures. The contagion effect from currency crisis in Turkey and Argentina and recession in South Africa caused global investors to exit emerging markets and move their money to safe haven assets.  Moreover, escalation of trade war between United States and China put additional pressures on Rupiah. We see that Bank Indonesia’s credibility in its stabilization pledge is sufficient enough to avoid risks of currency crisis like Argentina, Turkey, or South Africa. Nevertheless, as external pressures and persistent current account deficit remain, BI should continue to anticipate potential market volatility by increasing its policy rates in the coming meeting.…
    26 Sep
    26 Sep
  • Deflasi tercatat sebesar 0,05% (mtm) atau inflasi sebesar 2,13% (ytd) pada bulan Agustus 2018, lebih rendah dibandingkan bulan Juli 2018 di mana terjadi inflasi sebesar 1,28% (mtm). Deflasi bulan Agustus 2018 sedikit lebih tinggi rendah dibandingkan deflasi bulan Agustus 2017 yaitu sebesar 0,07% (mtm). Deflasi ini tidak sesuai dengan prediksi LPEM bulan sebelumnya bahwa akan terjadi inflasi rendah yang didorong oleh konsumsi hari raya.  Penurunan harga bahan makanan yang cukup besar serta masih berlanjutnya dampak penurunan harga tiket transportasi terjadi di luar prediksi.…
    05 Sep
    05 Sep
  • Rupiah’s depreciation to Rp14,600 is driven by confluence of external factors, particularly contagion effect from Turkish Lira’s rapid depreciation throughout emerging markets.   Additionally, market still take into account risk of reduction of global growth due to trade war between US, China, and EU, and its negative implication on Rupiah’s exchange rate. We see strength of Indonesia’s economic fundamentals  and credibility of BI’s promise to defend exchange rate stability prevent Rupiah from experiencing rapid depreciation like other more vulnerable emerging market currencies. Nevertheless, external risks and widening current account deficit makes increase in benchmark rate  this Wednesday necessary.…
    14 Aug
    14 Aug
  • Persistently muted household consumption growth, which is still under 5%, signals that households remain very vigilant to fluctuations in income growth and external risks despite very low and manageable inflation. Under better circumstances, both government and central banks might want to push growth further by relaxing monetary policies and increasing government expenditure. However, both fiscal, current account, and capital flow positions do not give much room for expansionary policies. Indeed, central bank has increased benchmark interest rate by 100 basis points and the government has pledged to postpone some infrastructure projects to 2019 and beyond to contain current account deficit.…
    03 Aug
    03 Aug
  • Pada bulan Juli 2018, inflasi tercatat sebesar 0,28% (mtm) atau 2,18% (ytd). Inflasi bulan ini lebih rendah dibandingkan bulan Juni 2018, sesuai dengan prediksi LPEM FEB UI pada analisis sebelumnya. Dibandingkan dengan bulan Juli tahun 2017, di mana inflasi tercatat 0,22% (mtm), inflasi bulan Juli 2018 lebih tinggi. Dilihat dari kelompok pengeluarannya, inflasi bulan Juli 2018 disebabkan oleh inflasi pada seluruh kelompok pengeluaran kecuali kelompok transport, komunikasi, dan jasa keuangan. Inflasi tertinggi tercatat pada kelompok bahan makanan sebesar 0,86% (mtm) disusul oleh kelompok Pendidikan, rekreasi, dan olahraga sebesar 0,83% (mtm).  Inflasi kelompok bahan makanan disebabkan oleh terutama kenaikan harga telur ayam ras dan daging ayam ras. Inflasi kelompok Pendidikan, rekreasi, dan olahraga disebabkan oleh peningkatan pengeluaran pendidikan pada bulan Juli 2018, awal periode belajar, seperti yang telah dijelaskan pada analisis sebelumnya.  Kelompok transportasi, komunikasi, dan jasa keuangan mengalami deflasi karena normalisasi tarif angkutan udara dan angkutan antar kota setelah periode Lebaran selesai.…
    02 Aug
    02 Aug
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