Jumat 31 Jan 2014 23:24 WIB

BI rate likely to increase this year

Rep: Satya Festiani/Mutia Ramadhani/ Red: Yeyen Rostiyani
Bank Indonesia holds its next policy-setting meeting on Thursday, and economists in a Reuters poll widely expected it to hold rates steady. Stock of money is in a state-own bank in Indonesia (Illustration).
Foto: Antara/Eko
Bank Indonesia holds its next policy-setting meeting on Thursday, and economists in a Reuters poll widely expected it to hold rates steady. Stock of money is in a state-own bank in Indonesia (Illustration).

REPUBLIKA.CO.ID, JAKARTA - Head of Economist of PT Bank Central Asia (BCA), David Sumual predicts that Bank Indonesia (BI) likely to increase its interest rate this year, at least 25-50 basis points. He also saw that foreign position in government securities was stable at 30 percent

Earlier, International Monetary Fund (IMF) said that global investors pulled their money out of developing countries, including Indonesia, due to high deficit and political instability. Indonesia's current account deficit remains a problem despite the decline in third quarter of 2013. Current account deficit in third quarter of 2013 fell slightly from 9.9 billion USD to 8.4 billion USD or from or 4.4 percent of gross domestic product (GDP) to 3.8 percent of GDP.

Sumual is optimistic that current account deficit in first quarter of 2014 will be below three percent because of government' policy to restrict imports and improving economy.

"We will see lover volume of import. Restriction on raw minerals exports have not been fully enforced, but the regulation allows certain level of import to ease the burden of current accout deficit.  

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