BI to Meet on Wednesday, Expected to Increase Rate

Days after the inauguration of Bank Indonesia Governor Perry Warjiyo, the BI board of governors will meet on Wednesday to discuss the latest economic and monetary issues.

Perry said in Jakarta over the weekend that the board of governors would continue holding its monthly meeting in the third week of each month, but additional meetings may be held if the central bank needed to give a quick response to a certain issue.

“Holding additional meetings is possible. But I wouldn’t call them an emergency meeting,” he said as quoted by kontan.co.id.

Several analysts have speculated about the objective of the meeting. Some believed the bank would increase its seven-day reverse repo rate as the rupiah remained under pressure after the rate increase by 25 basis points (bps) to 4.50 percent on May 17.

In a meeting in August 2013, BI increased the reference rate by 50 bps to 7 percent.

Head of Gajah Mada University’s economy and public policy study center, Tony Prasetiantono, estimated that BI would increase the rate by 25 bps, saying that the bank needed to increase the rate by 50 bps this month.

“That is why it increased the rate by 25 bps [in the previous meeting]. After it is evaluated, it needs another increase of 25 bps,” he added.

Meanwhile, head of the University of Indonesia’s economic and society investigation center, Febrio Kacaribu, said BI needed to monitor the market carefully before making any decision on the rate. He said capital outflow had started to slow down.

Courtasy : Thejakartapost
Photo : Jakarta Globe

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