BI Rate Up Again

Many say the BI Rate by 25 basis points this time beyond the estimated market participants given the economic conditions and inflation which recently has been showing positive signs .BI rate hike this time will be the last rise before eventually going down again . Along with economic recovery and the level of consumption of Indonesian society that will rise in 2014 , a new central bank will lower expected return rate cut at the end of next year . But do not fall diprediksikannya massively materialize gradually but it should also be adjusted by several financial industry including banking . Fourth quarter of 2014 , it is possible ( down ) but not many , most only 25-50 basis points .
As is known , the Board of Governors ( RDG ) yesterday Monthly Bank Indonesia set a higher benchmark interest rate / BI Rate by 25 basis points to 7.5 % . BI Rate was also followed by the landing facility from 7.25 % to 7.5 % . Meanwhile, the deposit facility BI / Fasbi rose from 5.5 % to 5.75 % .
The increase in the benchmark interest rate / Bank Rate to 7.5 % positive impact assessed for government bonds ( SUN ) / bond . Treasury bond prices experienced a correction in the secondary market , as investors make adjustments to the BI Rate .For almost the whole tenor bond bond prices decline ranged from 70-120 basis points .
Correction bond prices make these bonds are still attractive because it can be used to market participants to enter into government bonds . That's because bond yields to rise . Opportunity for investors with a long-term investment horizon such as pension funds and life insurance to get .
However if seen bond prices will tend to rise even if it is limited . The issue of reduction of stimulus by the U.S. central bank ( The Federal Reserve ) affect bond prices . So BI is currently raising interest rates in order to anticipate the Fed will actually do the tapering . Tapering the issue re-surfaced today makes bond prices will go up . The increase in interest rates would have an impact on corporate bonds / private . That's because the movement of the price does not fluctuate like Treasury bonds .
Rate Composite Stock Price Index ( CSPI ), which initially fell slightly and tried to rebound , it collapsed ahead of the close of trading after the Board decision Gubernut dipersuram by Bank Indonesia ( BI ), which raised the BI rate level of 7.25 % to 7.5 % .
BI rate hike triggers the perception of Indonesian macro economy will not improve with the onset of high inflation will still vote until the end of the year .Market players choose actions in early trading and speculating wait & see the positive rate of market entry as Asian stock markets , even rollicking to sell in the afternoon session .
Plus the rate of opening of the Asian markets and European markets sank into obscurity .In yesterday's trading , European stock markets moved higher earlier in the session , was turned down as a negative response to the release of some market participants that the performance of listed companies weakened . The emergence of a stable release German inflation is not as much positive response from market participants .