BI still awaits despite the Fed's signal

REPUBLIKA.CO.ID, JAKARTA – Indonesian central bank, Bank Indonesia (BI) decided to await after the Federal Reserve signaling to increase its interest rate after completing the tapering off process. 

“No forward guidance from me. In fact, BI has a number of intruments namely exchange rate, interest rate, or policy rate,” Governor of BI, Agus Martowardojo, said on Friday. 

According to Martowardojo, BI policies on monetary or microprudential depended on the dynamic from both local and global economy, 

“I just want to make clear that we will maintain tight economic policy,” he said.  

Meanwhile, Director of Bahana TCW Investment Management, Budi Hikmat hopes that Bank Indonesia (BI) will not raise its benchmark interest rate despite the Federal Reserve’s signaling to increase its interest rate in the first semester of 2015.

Hikmat explained that more increase on BI’s interest rate would trigger competition between banking and government because Directorate General of Debt Management issued state bonds monthly. 

“In fact, target of bond issuance equals to the amount of credit targeted by banking sector. No wonder that deposite’s interest rate will also increase. That could trigger competition between banking and government,” Hikmat explained.