Google

ASEANAFFAIRS
Sign up | Log in

    ASEAN PROFILES

  ASEAN KEY DESTINATIONS

Home  >>   Daily News  >>   Indonesia  News  >>   Economy  >>   Inflation may harm Indonesia's central bank reputation
NEWS UPDATES Asean Affairs        29 January 2011

Inflation may harm Indonesia's central bank reputation

Related Stories

January 21, 2011
Inflation, policy risk in Indonesia

January 19, 2011
Deutsche Bank warns of Indo inflation

January 15, 2011
Indonesia set to raise rates

January 14, 2011
Indo rupiah heads down

January 12, 2011
Bank Indonesia delays on rate increase

After a stellar 2010, when Indonesia's economic planners had a good record, analysts now wonder whether the central bank's reluctance to hike interest rates in the face of increasing inflation could destroy their hard-won credibility.

Already this year there has been a mini-run on the stock market, bond yields have risen 200 basis points and the rupiah has dipped as concern that Bank Indonesia is behind the curve on policy has spooked the market.

Yet the governors at the vast and gleaming bank headquarters in Central Jakarta seem unmoved, content to keep the core interest rate at 6.5 percent - the same record low level it has held for more than 18 months - even as many other central banks in the region have tightened policy.

"This is a period when fund owners, especially foreigners, really want the BI rate to be raised," the central bank governor, Darmin Nausution, told a briefing of senior editors this week, flanked by his more somber deputies. "Indeed, a BI rate hike will reduce liquidity in the economy, more or less cutting consumption [and] reducing inflationary pressures - but it can also invite more capital inflows."

At the heart of the bank's caution lies the fear that the "hot money" that has poured into Indonesia and many other emerging markets in the past 18 months could just as quickly evaporate, plunging the country into chaos like that in 1998, when longtime President Suharto resigned amid massive social unrest caused by the Asian financial crisis.

But while the governors see the clamor for a rate rise as a hoped-for, self-fulfilling prophecy by outsiders, the economists making those calls are questioning the bank's credibility. "They are missing the global context," said Wellian Wiranto, a Singapore-based economist with HSBC, referring to mounting inflationary pressures around the world.


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
Contact: marketing@aseanaffairs.com

Comment on this Article. Send them to  your.views@aseanaffairs.com

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
 
or
submit your comment in the box below
Name

Name


Email

Email



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


Today's  Stories    29  January 2011 Subsribe Now !
• Taxes up in Cambodian casinos
Subcribe: Asean Affairs Global Magazine
• Inflation may harm Indonesia's central bank reputation Asean Affairs Premium
• Dynamics shift leads commodities rise
• Suu Kyi appeals for investment, support
Research Reports
on Thailand 2007-2008

•Textiles and Garments Industry

•Coffee industry

•Leather and footwear industry

•Shrimp industry


• Philippines sees 7 percent yearly growth
• Chi-East rolls out in Japan, HK, S'pore
• Thai government predicts 4.5 percent growth
• Thai gold firm plans listing
Asean Analysis    30 January 2011 Advertise Your Brand
• WEEKLY SUMMARY Sponsor Our Events
Asean Stock Watch    28 January 2011
• ASEAN will finish the week well
Global News Impacting Asia    17 November 2010
• Bank of America sees Asian inflation
• Lloyd’s increases insurance push in Malaysia
• Wells Fargo analyst on euro
• Obama’s visit to Asia

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

ASEAN  ANALYSIS

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

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

Our Products | Work with us | Terms of Use | Site Map | Privacy Policy | Refund Policy | Shipping/Delivery Policy | DISCLAIMER |

Version 5.0
Copyright © 2007-2015 TIME INTERNATIONAL MANAGEMENT ENTERPRISES CO., LTD. All rights reserved.
Bangkok, Thailand
asean@aseanaffairs.com