By Arijit Ghosh and Aloysius Unditu
June 30 (Bloomberg) -- Indonesia's central bank may raise its benchmark interest rate for a third straight month to slow inflation that is forecast to reach a 21-month high in June.
Governor Boediono and his seven colleagues will increase the key rate to 8.75 percent from 8.5 percent, according 14 of 18 economists in a Bloomberg News survey. The board of governors next met on July 3 in Jakarta to set monetary policy.
Bank Indonesia has joined central banks across Asia in raising borrowing costs as soaring fuel and food prices stoke inflation. Consumer prices in Southeast Asia's largest economy probably rose 12.6 percent in June from a year earlier, according to the economists' survey, after the government in May increased fuel prices for the first time since October 2005.
``The rate hikes by the BI will be gradual, more to contain inflation expectations,'' said Fauzi Ichsan, chief economist at Standard Chartered Plc in Jakarta. Bank Indonesia will also raise borrowing costs to show ``it recognizes the issue.''
President Susilo Bambang Yudhoyono's government raised fuel prices by about 30 percent to reduce its burden of capping pump costs. That made it more expensive to transport food, steel and cement across the 18,000 islands that make Indonesia the world's largest archipelago.
With consumer confidence at a two-and-a-half-year low, companies such as PT Ciputra Development may not immediately pass on higher costs of steel, cement and transportation to customers, said Harun Hajadi, a company director at Indonesia's third-largest property developer.
`Gradual Manner'
``There is no other way but to pass through the cost increase to customers,'' Harjadi said. Still, the company will not pass on the entire 15 percent increase in construction costs to customers straightaway, choosing to raise prices ``in a gradual manner.''
The Central Statistics Bureau, which will change its base year to calculate inflation to 2007 from 2002, will release the data tomorrow. Consumer prices rose 2.2 percent in June from a month earlier, according to economists in the survey, while core inflation, which excludes food prices, accelerated to 9.5 percent, according to the survey.
Bank Indonesia in May was the first central bank in Southeast Asia after Vietnam to raise borrowing costs this year. Vietnam raised its benchmark rate in January. India and the Philippines followed this month.
Malaysia may follow suit after the government raised petrol prices to stem crippling subsidy costs. Thailand may also adjust monetary policy next month.
Rising Currency
Bank Indonesia will also help strengthen the rupiah by selling dollars, Deputy Governor Hartadi A. Sarwono said on June 26. A rising currency will help lower costs of imported wheat, soybean and fuel.
``We will also intervene by selling dollars if there is huge demand from'' state oil and utility companies, Sarwono said. ``We will enter the market to curb high dollar demand.''
The rupiah had its second weekly gain in the seven-day period ended June 27. The currency, which has declined 1 percent in the past year fell 0.2 percent on June 27.
The central bank will also have to watch out for a second round of inflation as salaries increase to match a rise in consumer prices, said David E. Sumual, an economist with PT Bank Central Asia in Jakarta.
``Bank Indonesia is currently willing to fight inflation with hawkish words,'' said Sumual. ``This is typical of the dilemma a central bank will face,'' during stagflation.
The statistics agency will also release data showing exports rose 18.5 percent in May after gaining 23.1 percent a month earlier, according to economists surveyed. Imports from outside trade zones may increase 47 percent.
The following is a table of economists' estimates.
BI Rate Estimates:
---------------------------------------------------------
End End
Firm July 3 3Q 4Q
---------------------------------------------------------
Median 8.75% 9.00% 9.00%
% Estimates at Median 78% 45% 42%
High 9.25% 10.50% 12.00%
Low 8.50% 8.75% 8.75%
Number of Estimates 18 11 12
---------------------------------------------------------
ANZ Banking 8.50% 8.75% 8.75%
ATR-Kim Eng Capital 8.75% 8.75% 8.75%
Bahana Securities 8.75% 9.00% 9.00%
Bank Central Asia 8.75% 9.00% 9.00%
Bank Danamon 8.75% -- --
Bank Internasional Indo 9.00% 9.25% 9.50%
Credit Suisse 8.75% -- 9.75%
Danareksa Securities 8.75% 9.00% 9.00%
HSBC 8.75% 9.25% 9.75%
IDEAglobal 8.75% -- --
ING Groep NV 8.75% -- --
LippoBank 8.75% 9.00% 9.00%
Mandiri Sekuritas 8.75% -- --
Morgan Stanley 8.75% -- --
Samuel Sekuritas Indonesia 8.50% -- --
Standard Chartered 8.75% 9.00% 9.00%
Sumitomo Mitsui Banking 8.75% 8.75% 8.75%
Thomson IFR 9.25% 10.50% 12.00%
---------------------------------------------------------
Inflation Estimates:
---------------------------------------------------------
CPI CPI Core Avg.
Firm YoY MoM YoY 2008
---------------------------------------------------------
Median 12.58% 2.23% 9.50% 10.87%
Average 12.50% 2.14% 9.61% 10.94%
High 13.22% 2.80% 11.17% 12.54%
Low 11.18% 0.95% 8.80% 10.10%
Number of Estimates 22 17 13 15
---------------------------------------------------------
Action Economics 12.70 2.30 8.80 10.50
ANZ Banking 11.80 1.50 9.40 10.10
ATR-Kim Eng Capital 12.80 -- -- 11.00
Bank Central Asia 11.80 1.50 8.80 --
Bank Danamon 13.18 2.78 11.17 12.54
Bank Internasional Indo 12.97 2.57 10.17 12.00
BNI Securities 12.60 2.23 9.50 10.20
Credit Suisse 12.80 2.50 -- 10.80
Danareksa Securities 11.92 1.62 -- 10.18
HSBC 13.00 -- -- 11.20
IDEAglobal 12.10 -- -- --
Indo Premier Securities 12.73 2.36 -- 10.87
ING Groep NV 12.70 2.40 -- --
LippoBank 12.56 2.20 9.56 10.70
Mandiri Sekuritas 13.22 2.80 9.72 11.10
Morgan Stanley 12.50 -- -- --
PT Mega Capital Indonesia 12.31 1.98 9.26 --
Samuel Sekuritas Indonesia 11.18 0.95 9.72 11.20
Standard Chartered 12.30 2.00 10.20 10.70
Sumitomo Mitsui Banking 12.30 2.00 9.40
Thomson IFR 13.10 2.70 -- 11.00
UBS 12.50 -- 9.20 --
---------------------------------------------------------
Trade Estimates:
---------------------------------------------------------
Exports Imports Trd Bal.
YoY YoY USD Mln
Firm (Ex Trade Zones)
---------------------------------------------------------
Median 18.5% 47.0% 1,985
Average 18.5% 46.8% 1,958
High 35.0% 60.0% 3,000
Low 9.7% 35.9% 890
Number of Estimates 15 13 13
---------------------------------------------------------
Action Economics 21.0% 37.0% 3000
ATR-Kim Eng Capital Partn 35.0% -- --
Bank Central Asia 16.0% 49.1% 1800
Bank Danamon 17.9% 47.0% 2080
Bank Internasional Indone 9.7% 39.1% 1780
Danareksa Securities 17.4% 35.9% 2737
HSBC 20.0% 45.0% 2400
IDEAglobal 19.2% 42.6% 2500
ING Groep NV 21.0% 53.0% 1991
LippoBank 13.1% 55.5% 890
Mandiri Sekuritas 23.5% 56.9% 1985
Samuel Sekuritas Indonesi 14.1% 48.0% 1417
Standard Chartered 11.0% 39.5% 1879
Thomson IFR 18.5% -- --
UBS 20.0% 60.0% 1000
---------------------------------------------------------
To contact the reporters on this story: Arijit Ghosh in Jakarta at aghosh@bloomberg.net; Aloysius Unditu in Jakarta at aunditu@bloomberg.net.
Posts
No comments:
Post a Comment