Highlights of BI’s Board of Governors Meeting in November
BI’s Board of Governors Meeting held in Wednesday and Thursday, 11/14 and 11/15, decided to hike BI 7-day reverse repo rate (benchmark rate) by 25 bps to 6.00%. In September, BI hiked its benchmark rate by 25 bps. Since May, it hiked its benchmark rate for 6 times with the total hike of 150 bps and issued a new regulation of derivative transaction of rupiah’s interest rate, namely Interest Rate Swap (IRS) and Overnight Index Swap (OIS).
Ballooning Current Account Deficit and Trade Deficit
In 3Q18, the current account deficit increased from USD8.0 billion equal to 3.03% of GDP in 2Q18 to USD8.8 billion equal to 3.37% of GDP.
Meanwhile, October’s trade balance posted the deficit of USD1.80 billion after the surplus of USD230 million in September. BI’s stance of raising its benchmark rate aims at cushioning investors’ fears of increment in current account deficit and trade deficit so that the stability in domestic economy and rupiah volatility keep in check.
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