Investors’ Positive Responses

Investors positively responded to BI’s firm stance of raising its benchmark rate higher. After being depreciated at 14,209, rupiah regained appreciation at below 14,000 level per USD. Meanwhile, in the bond market, the 10–year–tenor sovereign bonds (SUN) yield tumbled nearly at 7% after briskly running at 7.62%.

Maintaining Growth Pace

One of fears looming from BI’s higher benchmark rate is the threat of lagging economic growth. BI’s concerted attempt to stabilize financial market likely results in the
disruption to the trend of economic growth stably topping 5%. BI’s abrupt stance of raising benchmark rate in 2013 resulted in the tumble in economic growth hitting the
lowest level at 4.74%.

Download full report HERE.