Sign up | Log in



Home  >>   Daily News  >>  Indonesia  >>Economy>>Indonesia inflation eases, but room for rate cut stays small
NEW UPDATES Asean Affairs   4  November 2015  

Indonesia inflation eases, but room for rate cut stays small

INDONESIA’S inflation rate dropped to its lowest in nearly a year in October, but most analysts say the central bank still lacks room to ease policy due to concern about the rupiah and the impact whenever United States interest rates begin to rise.

October’s annual inflation rate was 6.25 per cent, the statistics bureau said yesterday, continuing a slide since a July peak of 7.26 per cent. The October rate is the lowest since November 2014, when President Joko Widodo raised subsidised fuel prices by more than 30 per cent.

Many Indonesians hope Bank Indonesia (BI) will soon start reducing the policy rate, kept at 7.50 per cent since a 25 basis point cut in February, to boost weak economic growth.

While declining inflation is helpful, most analysts say there isn’t room for BI to cut at a November 17 policy meeting because the rupiah remains fragile ahead of a Federal Reserve decision to finally start raising US interest rates.

“We have penciled in a 25 basis points cut in December. Not this month, because BI will be eyeing employment data in the US,” Fakhrul Fulvian, an analyst at Bahana Securities in Jakarta said.

In its last policy statement on October 15, BI said it saw domestic economic pressures receding, indicating hope for room to cut the benchmark rate.

The central bank has said there is a big possibility the annual inflation rate will be near three per cent at year-end, although it has maintained its baseline scenario at 3.6 per cent.

In November 2014, the fuel-price rise sent the inflation rate to 8.36 per cent in December, and from January the subsidies were slashed.

The late-2014 developments mean beginning this month, the base for calculating annual inflation rates will be high, so the number should decline significantly.

BI’s main worry, analysts say, is still the rupiah, which has weakened more than nine per cent this year against the greenback.

There remains concern that whenever the Fed raises rates, there will be renewed pressure on the rupiah.

There is political pressure on BI to cut rates to spur annual economic growth, which in the second quarter was 4.67 per cent, the slowest pace in six years.

On Thursday, Indonesia will announce third-quarter growth data.

OCBC, in a note ahead of the release of the October 2015 inflation data, said “the magnitude of currency volatility and the lingering uncertainty over Fed fund rate hike potential will most likely keep BI’s hands tied”.

Reach Southeast Asia!
10- Nations, 560- Million Consumers
And $1 -Trillion Market
We are the Voice of Southeast Asia Media Kit
The only Media Dedicated to Southeast Asia Advertising Rates for Magazine
Online Ad Rates

Comment on this Article. Send them to

Letters that do not contain full contact information cannot be published.
Letters become the property of AseanAffairs and may be republished in any format.
They typically run 150 words or less and may be edited
submit your comment in the box below

Today's  Stories                           November 4 , 2015 Subsribe Now !
• VAMC cuts rates on NPLs denominated in euros, dong Subcribe: Asean Affairs Global Magazine
• Indonesia inflation eases, but room for rate cut stays small
• Financial tool tweaked to sharpen interbank market
Research Reports
on Thailand 2007-2008

• Textiles and Garments Industry
• Coffee industry
• Leather and footwear industry
• Shrimp industry

• HCM City seeks to boost SMEs
Myanmar ripe for Thai investment, says envoy
Asean Analysis                   October 22, 2015
• Asean Analysis October 22, 2015
Climate justice advocates call for fair shares,fair deal and fair process
Advertise Your Brand

Asean Stock Watch  November 3,   2015
• Asean Stock Watch-November 3, 2015
The Biweekly Update
• The Biweekly Update October 16, 2015

ASEAN NEWS UPDATES      Updated: 04 January 2011

 • Women Shariah scholars see gender gap closing
• Bank Indonesia may hold key rate as inflation hits 7 percent
• Bursa Malaysia to revamp business rules
• Private property prices hit new high in Singapore • Bangkok moves on mass transport
• Thai retailers are upbeat
• Rice exports likely to decline • Vietnamese PM projects 10-year socioeconomic plan


This year in Thailand-what next?

AseanAffairs   04 January 2011
By David Swartzentruber      

It is commonplace in journalism to write two types of articles at the transition point between the year that has passed and the New Year. As this writer qualifies as an “old hand” in observing Thailand with a track record dating back 14 years, it is time take a shot at what may unfold in Thailand in 2011.

The first issue that can’t be answered is the health of Thailand’s beloved King Bhumibol, who is now 83 years old. He is the world's longest reigning monarch, but elaborate birthday celebrations in December failed to mask concern over his health. More






1.  Verifier

1. Verifier

For security purposes, we ask that you enter the security code that is shown in the graphic. Please enter the code exactly as it is shown in the graphic.
Your Code
Enter Code

Home | About Us | Contact Us | Special Feature | Features | News | Magazine | Events | TV | Press Release | Advertise With us

| Terms of Use | Site Map | Privacy Policy  | DISCLAIMER |

Version 5.0
Copyright © 2006-2017 TIME INTERNATIONAL MANAGEMENT ENTERPRISES CO., LTD. All rights reserved.
Bangkok, Thailand