BI to Wait for Right Time to Ease Monetary Policy

Jakarta, 06 Dzulqa’dah 1437/09 August 2016  (MINA) – Bank Indonesia (BI), the central bank, has admitted that various macro-economic indicators have been supportive for easing the monetary policy but the central bank has decided to wait for the right time to do it in terms of market psychology and domestic as well as global economic dynamism.

“It will be determined by the timing, and it will have to be seen whether the right time to do so is in June-July, August-September or November-December in terms of market conditions. The board of governors is considering this,” Antara reported, quoting BI Deputy Governor Perry Warjiyo here on Monday.

He said timing was the main factor being considered by the central bank before deciding its next monetary policy. Other factors such as inflation, current account and growth, he said, are now already within the radar of the bank.

To determine whether the time is already right, he said BI would see if the psychological condition in the financial market was right.

He said if the time is right, it can be assured that monetary easing policy transmits well to give added value to the economy.

He said besides the momentum, BI would also consider economic conditions to see if it has met its projection as well as potential risks from domestic and global economic condition.

The risks include global economic uncertainty as a result of the rare hike by the Fed and the impact of Britains exit from the EU as well as the rising prices of commodities, he said.

In terms of domestic factors, Perry said BI would consider realization of budget spending this year and the effectiveness of its earlier monetary policies in boosting credit growth.

All these factors would be considered by the board of governors in its meeting this month, the result of which will be made known on August 19 in line with the change of its reference rate from 12-month BI Rate to 7 Day Reverse Repo Rate.  (T/R07/R01)

Mi’raj Ilamic News Agency (MINA)