Money Supply Declines in December 2017 - Bank Sentral Republik Indonesia
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August 20, 2018

Broad money (M2), as a measure of liquidity in the economy, posted slower growth in December 2017. M2 stood at Rp5,418.5 trillion, with growth decelerating from 9.3% (yoy) the month earlier to 8.3% (yoy) on the back of all components, including narrow money (M1) and quasi-money. M1 growth declined from 13.1% (yoy) the month earlier to 12.4% (yoy), while quasi-money moderated from 8.0% (yoy) to 6.8% (yoy) in the reporting period.

Based on the affecting factors, the main impediment to M2 growth was a contraction of financial operations by the Central Government. The contraction was evidenced by net claims on the Central Government, which sank from 1.9% (yoy) to -5.7% (yoy). On the other hand, loans disbursed by the banking industry totalled Rp4,763.2 trillion, with growth accelerating from 7.4% (yoy) to 8.2% (yoy). Meanwhile, Net Foreign Assets (NFA) also posted gains, increasing from 17.2% (yoy) in November 2017 to 18.7% (yoy) in December 2017.

The banking industry continued to lower deposit and lending rates in response to monetary policy easing through reductions in the BI 7-Day (Reverse) Repo Rate. Lending rates averaged 11.30% in the reporting period, down 15bps on the previous month. Similarly, commercial banks also lowered interest rates on 3, 6 and 12-month term deposits from 6.17%, 6.63% and 6.82% to 6.11%, 6.61% and 6.80%. Conversely, the banks hiked rates slightly on 1 and 24 month term deposits from 5.80% and 6.72% to 5.81% and 6.73%.

Complete information and statistics concerning money supply as well as relevant analyses are available here.

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