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Indonesia tests if 7th rate cut can lift frustratingly soft consumption
JAKARTA, uk thecanadagooseoutlet canada goose outlet Aug 23 (Reuters) A cut in interest rates by Indonesia central bank may not be enough to give sluggish consumer spending a jolt, as weakness in canada goose clearance sale purchasing power and a reluctance by banks to lend undercuts efforts to boost Southeast Asia biggest economy.
Bank Indonesia (BI) on Tuesday unexpectedly cut its benchmark policy cheap canada goose uk rate for the first time Canada Goose Jackets since canada goose uk outlet October, bringing the rate down 25 canada goose coats basis points to 4.50 percent. It also announced some plans to tweak credit rules in a bid to boost lending and consumption.
Josua Pardede, economist at Bank Permata said expects the average interest rates banks offer to remain above 10 percent by year end despite Tuesday policy rate cut.
The central bank had already trimmed the benchmark six times by a total of 1.5 percentage points last year, to limited effect. Commercial banks only followed slowly by lowering their lending canada goose uk black friday and deposit rates, but loan growth has remained weak partly because banks concentrated on tackling bad loans.
Consequently, canada goose economic growth in canada goose coats on sale the country with 250 million people has failed to accelerate as policymakers had hoped. The second quarter annual growth rate of 5.01 percent the canada goose store same as canadian goose jacket in the first quarter highlighted how the economy is stuck in a lower gear.
think interest rates do not directly affect certain sectors, said Jahja Setiaatmadja, the chief executive of Indonesia largest bank by market size Bank Central Asia.
you lower interest rates for working capital loans but sales have not risen, it wouldn result in demand for new loans, Setiaatmadja told Reuters.
Policymakers have openly canada goose clearance said they are confused over why people aren spending, with some officials calling it mystery Private consumption accounts for over half of Indonesia gross domestic product (GDP).
Indonesia inflation rate is low Canada Goose sale historically, exports are improving, investment canada goose black friday sale is growing and consumer confidence is high.
Market research firm Nielsen this week said that in the second quarter, consumers in Indonesia were the third most optimistic in 63 countries it canada goose factory sale surveyed, following only those in the Philippines and Canada Goose Coats On Sale India.
MUTED Canada Goose Online MARKET REACTION Market reaction to the rate cut was muted, with the rupiah barely moving, while the yield on Indonesia benchmark 10 year government bonds and the stock index buy canada goose jacket showed only mild gains.
market buy canada goose jacket cheap reaction after the rate cut is evidence that cheap Canada Goose market is less optimistic on the Canada Goose Parka direct linkage between lower rates and consumer purchasing intention, said Taye Shim, head of research at Mirae Asset Sekuritas Indonesia.
According to Pardede of Bank Permata, addressing the issue of declining purchasing power in uk canada goose the section the bottom 40 percent of the population was crucial. He argued this should be done by using fiscal measures including programmes to create jobs.
wants to boost credit growth and all the changes are directed at the banking industry. But the question is how fast can banks respond by lowering their rates, said Pardede, noting how lenders faced different liquidity conditions and risks.
long as purchasing power in canada goose uk shop the middle low is still weak, demand for corporate credit will not grow too much, he said.
Banks that still have a high non performing loan ratio Canada Goose online may set aside more provisions, Kristiyana said, which could Cheap Canada Goose hit bank profitability, capitalisation and risk Canada Goose Outlet appetite. (Additional reporting by Fransiska Nangoy; Editing by Ed Davies and Richard Borsuk).