Economist of PT Bank UOB Indonesia Ho Woei Chen said on Saturday that the central bank maintained its key rate at 7.5 percent after previously reducing it by 25 basis points.
Chen predicted that the interest rate in November would be raised because the world crude price was going down.
He hoped that Indonesia and the United States would not have far different policies regarding the capital outflow so that the rupiah would not depreciate further.
"With the Fed making interest rate adjustment, BIs policy to lower the interest rate would have pressure impacts on the rupiah. In the meantime, raising the interest rate will boost inflation and weaken the domestic growth prospect," he said.
Since early this year, the rupiah has depreciated by 14.3 percent against the US dollar, causing it to be at the lowest point over the past 17 years.
Chen predicted that the rupiah would depreciate again in the fourth quarter of this year as the commodity sector was expected to weaken when the US took interest rate adjustment.
"We forecast that the rupiah exchange rate will further depreciate from Rp14,000 to Rp17,700 per US dollar in the fourth quarter," the Bank UOB economist said.
He said that export and import data in August 2015 showed a decline in the past nine consecutive months, yet it showed a better figure if compared with the previous predication.
August 2015 exports declined 12.3 percent year-on-year. Prediction has previously put it at 17.7 percent. Exports in July dropped 18.8 percent while prediction has previously put a decline of 28.4 percent.
Year-on-year imports went down 17.1 percent while prediction has put it at 23.3 percent.
He said that the decline in imports caused the trade balance to be surplus by US$434 million.
He said the decline in the export demand would slow down the economic growth in the second semester of 2015. Thus, economic growth rate is predicted to be close to the rat of that in first semester which was recorded at 4.7 per cent year-on-year.
Regarding the 7.3 percent year-on-year inflation in August, Ho Woei Chen predicted that the inflation in December would reach 4-4.5 percent year-on-year.
On Thursday, September 17, the BI Board of Governors meeting decided to maintain the central banks key interest rate at 7.5 percent with the interest rate of deposit facility at 5.5 percent and lending rate facility at 8 percent.
The decision is taken in line with the efforts to bring the inflation rate to the targeted range of 4 plus minus 1 percent in 2015 and 2016.
It is also intended as an anticipatory step in the face of the possibility of the Fed to increase its interest rate.(*)
Editor: Heru Purwanto
Copyright © ANTARA 2015
