OJK Boss Says National Financial Services Sector Is Stable

JAKARTA - Chairman of the Board of Commissioners of the Financial Services Authority (OJK) Mahendra Siregar assessed that the national financial services sector is stable, supported by strong capital, adequate liquidity conditions, and maintained risk profiles, thereby increasing optimism that the financial services sector is able to mitigate the risk of a higher for longer global interest rate.

"The divergence of global economic performance is still continuing. In the US, the high inflation rate amid the solid economic performance encourages the Fed's policy to be predicted to be more hawkish," he said at a press conference on the results of the OJK Board of Commissioners (RDK) Meeting in September 2023, Monday, October 9.

Meanwhile in Europe, although the economy's performance continues to be weak, the inflation rate is still high, so European monetary authority has again raised interest rates but hints that the current interest rate has reached its peak.

Then in China, he said, economic recovery that has not been in line with expectations and economic performance, which is still at the pandemic level, has increased concerns for the recovery of the global economy. Meanwhile, fiscal and monetary incentives issued by the authorities are still limited.

This development, he said, prompted continued increase in debt yields in the US and strengthening the US dollar, causing pressure from emerging markets including Indonesia.

"VOLatility in the financial market, both in the stock market, bonds, and exchange rates, is also in an increasing trend," added Mahendra.

In the domestic economy, continued Mahendra, the inflation rate increased 3.27 percent yoy, in line with market expectations of 3.3 percent, driven by an increase in the price of most expenditure groups, especially in the category of food, beverages and tobacco.

"The trend of core inflation movement is still slowing down, decreasing to 2.18 percent yoy, which is also reflected in low retail sales," added Mahendra.

However, he assessed that the performance of the corporate sector was relatively good, as seen from the Manufacturing PMI which continues to be in the expansion zone and trade balance which still records a surplus.