Mirza: Do not be Distracted, Time BI Rate Up

Bank Indonesia advised not too late to raise interest rates in the BI Rate to anticipatethe high rate of inflation.

"BI Rate still could be raised 50 basis points to 7 percent by the end of this year," said Chief Economist of Bank Mandiri Mirza Adityaswara in Jakarta, Monday, August 23, 2010.

He stressed a number of other countries have raised interest rates, but apparently stillwaiting for BI. According to him, do not let the market had anticipated the high interest rates, while it is too late to do BI.

"We experience a capital inflow into Indonesia, it will even continue to enter until 2011.Generally in good condition we just have to be careful," he said.

According to him, not to be lulled by the central bank's current condition. Moreover, in the belief that the debt rating that will achieve investment grade (investment grade).

"BI is not too late to raise interest rates because it will cause the correction of foreigninvestors," he said.

In fact, he reminded the BI should respond to inflation since last month. It's not justbecause of high food but also the high demand so that needs to respond in monetary terms by the BI.

BI Rate Held at 6.5%, GWM Promoted So 8%

Bank Indonesia to maintain its benchmark interest rate in the BI Rate at 3 September 2010 at a rate of 6.5 percent. Policy of holding interest rates this is the 14th time in BIsince August last year.

"This decision was taken after a thorough evaluation of recent developments," Nasutionsaid the central bank governor in Jakarta, Friday, September 3, 2010.

BI recognizes the recent inflationary pressures are quite high that a special attention.On that basis, taking into account the potential for future inflation pressures, the central bank raised required reserve ratio of 5 percent to 8 percent for the rupiah DPK.

"This policy was carried out considering the substantial excess liquidity," he said. On the fulfillment of additional primary reserve requirement of 3 percent will be givenremuneration of 2.5 percent pa.

According to Nasution, the combination of these policies is considered sufficient to maintain monetary and financial stability amid the still high capital flows.

Finally BI BI Rate So Raise 6.75%

After its benchmark interest rate (BI Rate) as much as 18 times at 6.5 percent, Bank Indonesia (BI) has finally raised interest rates by 25 basis points to 6.75 percent or. This decision was based on the inflation factor due to rising food prices.
"Yes, it's one of our considerations," said BI deputy governor Halim Alamsyah, in building BI, Jakarta, Friday, February 4, 2011.Mentioned in the release of Bank Indonesia, the central bank wary of inflation pressures are likely to increase in the future, along with the disruption of supply materials basic needs (volatile foods) and the possibility of adjusting the prices set by the government (administered prices).
Bank Indonesia believes that the rise in inflation expectations will be minimized if done improving the effectiveness of production, distribution, and availability of basic commodities at the national and regional level.
In terms of Bank Indonesia, and makroprudensial monetary policy mix that has taken years ago will continue to be strengthened by optimizing all the instruments in a balanced and measured.As is known, during this Bank Indonesia has embarked on a number of policies to control liquidity and capital inflows as increases in the minimum reserve requirement (GWM) of rupiah and foreign currencies, a one month holding period (OMHP) of Bank Indonesia Certificates (SBI), and restriction-term foreign loans short bank.
Board of Governors believes, the momentum of global economic recovery increased again although it is still overshadowed by the risk of debt crisis in Europe.In the middle is still weak economic recovery in developed countries, the economic performance of emerging markets continued to show improvement. In addition, global commodity prices continue to rise, not only influenced by supply and demand factors, but driven by the shift of investment into commodities markets due to the weakening U.S. dollar and the low yields in developed countries.So far, policy responses of central banks of developed countries still tend to keep interest rates at relatively low levels.Meanwhile, some emerging market countries has increased the interest rate policy is accompanied by a policy to manage capital inflows and stabilize exchange rate movements.
Earlier, the Central Statistics Agency (BPS) said the scourge of basic commodities rise in inflation lately. In fact, inflation year on year (yoy) in January was 7.02 percent penetrated. Inflation in January was recorded at 0.89 percent.
With rising inflation, many economists had suggested that the central bank to raise interest rates.

The increase in the BI Rate Decision dilemma

PT Mandiri Securities chief economist, Destri Damayanti, assess the steps the centralbank raised the BI Rate is a decision dilemma.
According to him, this increase beyond previous expectations despite a lot of pressurefrom the market. "It was beyond expectations, this decision dilemma," said contacted in Jakarta, Friday, February 4, 2011.

BI rate decision is inconsistent with the consistency of the BI is more focused on coreinflation. But the fact also makes sense because food inflation surged in the last two months. The increase in the BI Rate was seen as a way the central bank to dampeninflation expectations. "Although the actual monetary terms can still be controlled," saidDestri.

Destri also predicts a rise in interest rates due to market pressures. "The market can not be resisted," he said.

From the banking side, Destri assess the increase in the BI Rate will not directly affectmortgage interest because the new will happen the next 3-6 months. But the first bankwill raise deposit rates by 50 bps. "But it all depends on each bank," he said.

Previously, Senior Economist, Standard Chartered Bank, Fauzi Ichsan, argues, the increase in the BI Rate is required to give to the market expectations that the Bankhelped the government reduce inflation expectations. "Inflation expectations soar due torising food inflation," he said.

Miranda: BI Rate Up It's Not Fun

Former Bank Indonesia Senior Deputy Governor Miranda rate of the Central Bank's decision to raise the BI Rate by 25 basis points to 6.75 percent is the first step to curb inflation.

"Inflation expectations are so real, if not done the first step, then inflation will be high,"said Miranda Gultom when met on the sidelines of a seminar at the Marine Building-Based Economic Dharmawangsa Hotel, Jakarta, Tuesday, January 8, 2011.

According to Miranda, raise the BI Rate is a decision that must be done to curb inflation. Miranda pointed out, in January 2010 and BI did not raise interest rates wheninflation expectations high. "Now, once seen there is a commitment, then the publicbelieves the economy again," he said.

According to Miranda, economic actors do not have to worry about the increase in the BI Rate. Therefore, the increase in the BI Rate is an important signal that the Central Bank to create a stable rate of the national economy.

Miranda said, a 12-year career in BI, raising interest rates is a decision that is verydifficult and unpleasant. But, as a public official's decision must be taken. "It was likeshortness of breath, but must be done," he said.