Broad Money Growth Accelerated in October 2018 - Bank Sentral Republik Indonesia
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July 08, 2020

Broad money (M2), as a measure of liquidity in the economy, accelerated in October 2018. M2 stood at Rp5,666.5 trillion in the reporting period, with the pace of growth quickening to 7.2% (yoy) from 6.7% (yoy) the month earlier on quasi-money, which increased from 6.3% (yoy) to 7.6% (yoy). Further M2 gains were slightly negated, however, by M1 growth decelerating from 8.2% (yoy) to 6.3% (yoy) in the reporting period.

Based on the affecting factors, faster NFA and credit growth contributed to M2 in October 2018. Net Foreign Assets (NFA) recorded a shallower contraction in the reporting period in line with the surge of reserve assets. Outstanding loans disbursed by the banking industry stood at Rp5,188.6 trillion as growth rallied from 12.4% (yoy) the month earlier to 13.1% (yoy). M2 growth was held back, however, by a -3.3% (yoy) contraction of net claims on the central government in October 2018, reversing the 4.5% (yoy) recorded in the previous period.

Transmission of the higher policy rate has remained effective, as reflected by higher deposit rates. The weighted average deposit rate tracked an upward trend in October 2018 for all tenors. Accordingly, the banking industry raised deposit rates on 1, 3, 6, 12 and 24-month tenors from 6.32%, 6.26%, 6.56%, 6.25% and 6.80% to 6.56%, 6.42%, 6.74%, 6.31% and 6.93%. In contrast, the banks lowered lending rates by an average of 12 basis points on the previous period to 10.89% in October 2018.

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



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