National Financial Stability Maintained, OJK Boss Says Must Stay Alert

JAKARTA - The Financial Services Authority (OJK) assesses that the stability of the national financial services sector is maintained with the performance of intermediation which is contributive to adequate liquidity and a strong level of capital.

Chairman of the OJK Board of Commissioners Mahendra Siregar said that the current condition of the global economy and financial market is conducive, even better than the original expectations.

"However, geopolitical developments need to be observed in line with tensions in the Middle East and Ukraine which have an impact on global economic conditions," he said at the OJK Monthly Board of Commissioners Meeting, Monday, April 2, 2024.

In addition, the potential impact of the global economy in the United States (US) looks solid and above expectations, so inflation tends to sticky, aka has not changed compared to before.

Mahendra said the Fed at the March 2024 Federal Open Market Committee (FOMC) meeting revised the US economic growth significantly along with rising inflation. However, the Fed still maintains a 75-base point interest rate reduction in 2024. The Fed's accommodative policy was also followed by European Central Bank and Central England Bank which also hinted at lowering interest rates in 2024.

"The normalization measure was also taken by the Bank of Japan by leaving the negative-era interest rate, by raising the interest rate by 10 basis points, which was the first time in 8 years," he said.

Then, in China, several economic performances were released such as retail sales, increase in imports, and inflation rates above market expectations with fiscal and monetary policies remained accommodative.

In terms of domestic, the Indonesian economy and inflation have increased along with food prices, but core inflation is maintained stable.

"This is expected to be an indication of future demand recovery, good indications also occur in domestic consumption, where there will be a significant increase in imports of consumer goods in February 2024," he explained.

Meanwhile, Mahendra said that the performance of the manufacturing sector was also recorded to continue to improve. However, it is still necessary to observe an increase in demand for consumer goods as export contraction continues and if the increase in import needs continues.