Bank Indonesia Governor: Rates Could Potentially Continue to Rise

March 29, 2014 Leave a comment

March 20, 2014, 9:42 a.m. ET
Bank Indonesia Governor: Rates Could Potentially Continue to Rise
By Farida Husna
JAKARTA, Indonesia–Bank Indonesia Governor Agus Martowardojo said Thursday that interest rates in emerging markets, including Indonesia, could potentially continue to rise if borrowing costs in the U.S. Increase.
“Such a condition is the new norm. Interest rates can’t fall too much,” Mr. Martowardojo told reporters.
Bank Indonesia last year increased interest rates by a total of 175 basis points since June as inflationary pressures increase and the country’s current-account deficit widened to a level it won’t be able to sustain for a long period.


Bank Indonesia was forced to tighten its policy despite signs the slowdown in China was also hurting Indonesian economic growth, as the world’s second-largest economy is the Southeast Asian country’s single largest export market.
Mr. Martowardojo reiterated Thursday that the central bank will continue to prioritize “stability over growth” for some time.
He said Indonesia’s current-account deficit may widen in the second quarter due to the seasonal repatriation of profits by foreign companies in the country and repayment of offshore borrowings. But the governor said the deficit will remain “guarded.”

Filed under Macro Trends

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