Thailand
Deputy governor: Enough rate cuts for Indonesia
JAKARTA: Indonesia’s central bank has cut borrowing costs enough to spur growth in the economy, senior deputy governor Mirza Adityaswara said, giving his clearest signal yet that the bank’s easing policy is over as inflation pressures pick up.
Boosting growth is “not about interest rates anymore,” Adityaswara said in an interview here yesterday.
“We monitor the external factors. We think we’ve already cut enough.”
Bank Indonesia was Asia’s biggest rate cutter in 2016 after six reductions to spur growth in South-East Asia’s biggest economy.
Since then, a weaker currency – fueled by expectations of higher US interest rates – and a pick-up in price pressures have put policy makers on hold. The central bank in February kept its benchmark rate unchanged at 4.75, which Adityaswara said was “low enough.”
“The current interest-rate level is sufficient to support growth,” he said. “So it’s not about interest rates anymore. It’s more about how the demand side picks up and that depends a lot on business confidence” and the improvement in commodity prices, he said.
Indonesia’s economy grew 5% last year and is forecast by the World Bank to pick up pace this year to 5.3. After dropping below 3% last year, inflation is starting to accelerate, reaching 3.8% in February.
Keeping inflation under 4% this year may be “a bit difficult,” Adityaswara said, adding that the central bank still thinks it can maintain it at about that level. The bank’s target range is 3% to 5%. – Bloomberg
Source: http://www.thestar.com.my/business/business-news/2017/03/10/deputy-governor-enough-rate-cuts-for-indonesia/