Highlights of BI’s February Board of Governors Meeting
BI’s Board of Governors Meeting held on Wednesday and Tuesday, 20-21 February, 2019 decided to hold 7-Day Reverse Repo Rate (7DRR) at 6.00%. In November 2018, BI raised 7DRR by 25 bps and on an accumulative basis hiked 7DRR by 6 times with the total increment of 175 bps as of May 2018.
Current Account Deficits & Maintainable Economy
In 4Q18, current account deficits were at USD9.1 billion or equal to 3.57% of GDP; thus, the 2018 deficits were at 2.98% per GDP. The figure was still below 3%: the safe threshold.
Meanwhile, the economic growth was maintainable at 5.18% y-y in 4Q18, slightly higher than the growth of 51.17% y-y in 3Q18. BI’s leaving 7DRR unchanged aligning with its efforts to control current account deficits, so the allure of financial markets is kept in check. Additionally, its stance is a harmonious alliance with the government’s commitment to accelerating Indonesia’s economic growth. If BI raises 7DRR, the hike will put a strain on Indonesia’s economic growth amid the shaky global economy.
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