JAKARTA - Bank Indonesia (BI) decided to raise the benchmark interest rate by 25 basis points (bps) to 3.75 percent. The same applies to the deposit facility interest rate from 2.75 percent to 3.00 percent and the lending facility from 4.25 percent to 4.50 percent.
In response to this, President Director of PT Bank Mandiri (Persero) Tbk Darmawan Junaidi said the steps taken by the central bank were in line with the central bank's strategy in maintaining the momentum of Indonesia's economic recovery after the COVID-19 pandemic.
Junaidi stated that the current condition of liquidity and the intermediation function of domestic banking is still maintained at a good level. Nevertheless, the potential for increasing Bank Indonesia's Statutory Reserves (GWM) in September 2022 still needs to be observed.
"However, the monetary policy and the increase in the BI 7DRRR benchmark interest rate by 25 basis points to 3.75 percent carried out by Bank Indonesia (BI) according to him are in line with the central bank's strategy in maintaining the momentum of Indonesia's economic recovery after the COVID-19 pandemic," he said in a statement. Market and Investment Outlook 2022 in Jakarta, Thursday 25 August.
He added that Indonesia's economic growth throughout this year is projected to still be able to reach the target set by the government, which is 5.2 percent. This optimism refers to the second quarter's economic growth reaching 5.44 percent, as well as the implementation of a number of programs to control inflation in the second half of 2022.
Meanwhile, Bank Indonesia also estimates that the inflation rate until the end of 2022 will be at the level of 5.24 percent with core inflation of 4.15 percent, which is mainly related to the potential for pressure from increased energy and food commodities.
Junaidi added that despite high inflation, BI also stated that this inflation rate was only temporary and would return to the level according to the target of 3 percent in 2023.
Meanwhile for the investment sector, Mandiri Investasi President Director Aliyahdin Saugi explained that in responding to and implementing strategies in the midst of fluctuating JCI conditions in managing assets under management, Mandiri Investasi did not act reactively, but had anticipated market conditions as is happening now by preparing products that are in accordance with customer investment needs.
"Of course, the volatile conditions will not affect investors who have a long time horizon, but short and medium term fund investors can allocate assets to fixed income or the money market," he continued.
Adi added, as an emerging market country with strong economic and fiscal stability, of course Indonesia is a very attractive country to be a place of investment for global investment managers. This can also be seen from the average PE ratio of shares in Indonesia, which is still far below developed countries, which means that it still has a very high growth potential.
"The Mandiri Investasi research team estimates that the JCI at the end of 2022 will be in the range of 7,800-8,100. There is still a chance for an increase in the range of 600-1000 points. But of course there are many global factors that can affect the JCI movement, both domestically and globally," he explained.
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