Latest news with #Warjiyo
Gulf Today
21-05-2025
- Business
- Gulf Today
Indonesia CB resumes monetary easing to support slowing economy
Indonesia's central bank cut its key interest rate on Wednesday as the market expected, resuming its monetary easing to support the slowing economy after pressure on the rupiah receded. Bank Indonesia (BI) lowered the benchmark 7-day reverse repurchase rate, known as the BI Rate, by 25 basis points to 5.50 per cent, as expected by 20 of 32 economists polled by Reuters. It also cut two other policy rates by the same amount. 'This decision is consistent with the forecast of low and manageable inflation in 2025 and 2026 within target to maintain the stability of the rupiah in accordance with its fundamentals, and to contribute to economic growth,' Governor Perry Warjiyo told a press conference in Jakarta. He said growth needed to be strengthened to mitigate the impact of US tariffs, and policies needed to support household demand and exports. Southeast Asia's largest economy grew an annual 4.87 per cent in the first quarter, its weakest pace in more than three years. BI slightly revised down its forecast for growth this year to a range of 4.6 per cent to 5.4 per cent compared with 4.7 per cent to 5.5 per cent previously. The government has set a 5.2 per cent growth target this year and President Prabowo Subianto has pledged to lift growth to 8 per cent by the end of his term in 2029. In the press conference, Governor Warjiyo urged banks to do more to support economic growth by lowering their lending rates and giving out more loans. 'Let's lower our interest rates, especially lending credit to support growth,' Warjiyo said. BI also said it would allow banks to source up to 35 per cent of their capital from foreign funds with effect from June 1. The current level is 30 per cent. The moves follow a slowdown in loans growth in April to 8.88 per cent, from 9.16 per cent in the previous month. BI also revised down its 2025 loan growth target to 8 per cent to 11 per cent compared with 11 per cent to 13 per cent previously. BI cut rates in September last year and again in January. It then held steady at the next three meetings as market volatility sparked by global trade tensions weighed on the rupiah, which plunged to a record low against the US dollar in April. It has since recovered by more than 3 per cent. Warjiyo further added that pressure on the rupiah had eased due to improved global market conditions and BI's intervention, but the bank was ready to take action, including intervention in the offshore market, if pressures reemerged. Analysts said BI could make more cuts in the coming months given the low inflation outlook, and depending on the rupiah's performance. 'My sense is BI is likely to deliver at least two more rate cuts in 2025 to 5.00 per cent as the economy needs to be supported by easing the monetary policy if USD/IDR continues to move lower to 16,000,' SMBC economist Ryota Abe said. The central bank also cut its overnight deposit facility and lending facility rates by the same amount to 4.75 per cent and 6.25 per cent, respectively.
New Straits Times
23-04-2025
- Business
- New Straits Times
Indonesia central bank holds policy rates to keep rupiah stable
JAKARTA: Indonesia's central bank held policy rates steady for a third consecutive review on Wednesday, as expected, aiming to maintain rupiah exchange rate stability amid global trade tensions. Bank Indonesia (BI) kept the benchmark 7-day reverse repurchase rate, known as the BI Rate, unchanged at 5.75 per cent, as expected by all but two of 26 economists polled by Reuters. It also kept its two other policy rates steady. The rupiah hit a record low earlier this month and the stock market plunged amid capital outflows triggered by the US announcement of reciprocal tariffs for countries including Indonesia, though they have recovered somewhat after President Donald Trump announced a 90-day tariff freeze. BI, which has had to balance market uncertainty with concerns about Indonesia's growth outlook, said the US tariff policy and China's retaliation have heightened global uncertainties. Governor Perry Warjiyo said the rate decision was in line with efforts to safeguard the rupiah's stability while continuing to assess future room for a cut, taking into account the country's inflation rate and growth prospects. "Our short-term priority is exchange rate stability. Once stability is maintained, the room for a rate cut will be more open and that would be the time to decide on future interest rate policy," Warjiyo said. The rupiah strengthened slightly to 16,860 per dollar after the decision was announced, versus 16,880 before, but has still depreciated more than four per cent so far this year. He said BI is not only committed to maintaining stability, but also to supporting economic growth. BI said on Wednesday it expects this year's growth for Southeast Asia's biggest economy to be slightly below the mid-point of its outlook range of 4.70 per cent to 5.50 per cent, while forecasting global economic growth to soften due to the trade war. "Despite macro indicators pointing to a need for rate cuts, markets are likely to price out easing this quarter as the rupiah continues to underperform on the back of domestic and tariff uncertainties," DBS economist Radhika Rao said. The sharp drop in the rupiah earlier this month had prompted BI to intervene in offshore non-deliverable forward (NDF) markets on top of intervention in domestic markets to support the rupiah. BI continued to intervene in the offshore NDF market since then, Warjiyo said. The central bank has previously said it has room to cut interest rates, citing low inflation. The annual inflation rate has stayed below its 1.50 per cent to 3.50 per cent target range so far this year, with March's rate at 1.03 per cent. Indonesia has sent a delegation to Washington to negotiate tariffs. Finance Minister Sri Mulyani Indrawati said if the US keeps its planned 32 per cent tariff for Indonesian exports, it could reduce growth potential by 0.30 to 0.50 percentage points. Some economists have said the direct impact from US tariffs on Indonesia's economy may not be as big as the hit some other countries might be exposed to, but any Chinese economic slowdown could hurt Indonesia more. China is Indonesia's biggest trade partner and a major source of investment.
Reuters
19-03-2025
- Business
- Reuters
Indonesia central bank does not expect change to mandate in financial law revision, governor says
JAKARTA, March 19 (Reuters) - Bank Indonesia governor on Wednesday said there had been talks about the central bank's mandate during discussions on parliament's planned revision to a 2023 financial law, but underlined no changes were expected. Governor Perry Warjiyo's comments came after BI kept interest rates unchanged against a backdrop of turmoil in local markets on concerns about global trade wars and the government's fiscal policy. Warjiyo was responding to a question in a press conference regarding plans to revise the 2023 Development and Strengthening of the Financial Sector Law, after the Constitutional Court ordered lawmakers earlier this year to review the law on matters related to the independence of the state deposit insurer agency. Parliament is currently discussing the law but there have been concerns lawmakers might also evaluate the central bank's role and rules around government bond purchases, according to local media reports. Passed in late 2022 and codified in 2023, the financial law widened BI's mandate to include supporting sustainable economic growth and formalising its direct purchases of government bonds, which it had done during the pandemic. Previously, its mandate was rupiah and price stability. "Discussions regarding the law is to emphasise on how BI pursues its objective ... It does not mean there is a change to the construction of the law," Governor Perry Warjiyo said. Talks regarding the revision have been about clarifying the meaning of sustainable economic growth, which BI has been interpreting as maintaining financial market stability and creating jobs, in synergy with other authorities, Warjiyo said. "BI will continue to prioritise stability to support sustainable economic growth," he said. He also said BI's purchases of government bonds in the secondary market this year would be aligned with its plans to provide liquidity to the financial sector. BI has bought bonds worth 47.31 trillion rupiah ($2.86 billion) in the secondary market so far this year, Warjiyo said. He has previously said BI would be ready to buy bonds in the secondary market to support the government's affordable housing programme. ($1 = 16,520.0000 rupiah)
Reuters
20-02-2025
- Business
- Reuters
Indonesia central bank to expand support for government's housing programme
JAKARTA, Feb 20 (Reuters) - Indonesia's central bank will support the government's affordable housing programme through purchases of bonds in the secondary market, Governor Perry Warjiyo told reporters on Thursday night. He did not explain how any purchase in the secondary market could provide any funding for the government. Spokespeople for Bank Indonesia (BI) and the finance ministry did not respond to request for comment. "Support, funding from Bank Indonesia is through purchases of government bonds from the secondary market," Warjiyo said at a joint press conference with government ministers and a lawmaker. Warjiyo had previously said BI would buy 150 trillion rupiah ($9.19 billion) worth of state bonds in the secondary market this year, 100 trillion rupiah of which will be used for debt switching with maturing pandemic-era bonds. "I have discussed with the finance minister that the funds could be used not only for debt switching for maturing COVID bonds, but also funding for programmes like housing," Warjiyo said. The administration of President Prabowo Subianto has pledged to provide three million affordable houses annually as part of his 2024 election promises. Finance Minister Sri Mulyani Indrawati said the government is weighing a plan to issue bonds aimed at funding the affordable housing programme, without providing a timeline or the size of the issuance. By law, Indonesia's central bank is not allowed to buy government bonds in the primary market, except for treasury bills with a maturity of less than a year. The governor and the ministers did not take any questions. Mukhamad Misbakhun, the head of parliament's finance commission who attended the press conference, later told reporters details of the central bank's funding support for the housing programme will be released as soon as next week after a hearing with parliament. ($1 = 16,325.0000 rupiah) Get a look at the day ahead in Asian and global markets with the Morning Bid Asia newsletter. Sign up here.
Reuters
12-02-2025
- Business
- Reuters
Bank Indonesia says liquidity measure will support government housing goal
JAKARTA, Feb 12 (Reuters) - Indonesia's central bank said it will increase to 80 trillion rupiah ($4.9 billion) the amount of liquidity freed up by reducing reserve requirements for banks that lend to the property sector, to support the government's housing goal. Bank Indonesia (BI) has been using similar liquidity measures to spur credit growth since 2023, by reducing the reserves banks are required to hold if they lend to sectors that are important for economic growth. The value of the liquidity measure for property loans is currently 23.2 trillion rupiah and will gradually rise to 80 trillion, Governor Perry Warjiyo said late on Tuesday. "This is a form of Bank Indonesia's commitment to fully support the president's programmes," Warjiyo told a press conference after meeting with representatives of the government and parliament. "We see that the housing sector will provide support for high economic growth and job creation," he said, adding that further support measures would be announced later. President Prabowo Subianto wants to build 3 million affordable houses each year. Last month, the government signed a deal with a Qatari investor to construct a million homes. Warjiyo spoke after he had met with Housing Minister Maruarar Sirait, State-owned Enterprises Minister Erick Thohir, lawmaker Mukhamad Misbakhun and Pandu Sjahrir, who was representing the new state investment agency Danantara. BI data shows that as of the second week of January, the various reductions on reserve requirements for lending to sectors including agriculture, trade, manufacturing, tourism and construction had freed up 295 trillion rupiah of liquidity. ($1 = 16,370 rupiah)
