Broad Money Growth Accelerated in September 2018 - Bank Sentral Republik Indonesia
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November 14, 2018

Broad money (M2), as a measure of liquidity in the economy, moderated in September 2018. M2 was recorded at Rp5,606.3 trillion in the reporting period, with growth ticking upwards to 6.7% (yoy) from 5.9% (yoy) the month earlier on the back quasi-money, which improved from 5.2% (yoy) in August 2018 to 6.3% (yoy). Nevertheless, faster M2 growth was slightly offset by M1 moderation during the reporting period as growth slowed from 8.6% (yoy) in the previous period to 8.2% (yoy).

Based on the affecting factors, expansive financial operations by the Central Government together with stronger credit growth triggered a hike in Net Domestic Assets (NDA) that fed through to faster M2 growth in September 2018. The pace of NDA growth edged upwards to 11.0% (yoy) in September 2018 from 9.0% (yoy) the month earlier, induced by expansive financial operations by the central government after a reversal of net claims on the central government from a -2.8% (yoy) contraction last period to positive 4.5% (yoy) in the reporting period. Meanwhile, outstanding loans disbursed by the banking industry stood at Rp5,137.2 trillion in September 2018 as growth improved further to 12.4% (yoy). On the other hand, M2 growth was limited by a deeper NFA contraction from -1.7% (yoy) to -3.9% (yoy) in the reporting period.

The recent hike in the policy rate by Bank Indonesia is effectively being transmitted through the interest rate channel. The weighted average deposit rate trended upwards in September 2018, boosted by 1, 3 and 6-month tenors that averaged 6.32%, 6.26% and 6.56%, up from 6.20%, 6.12% and 6.37% respectively the month earlier. The banks also increased interest rates on 12 and 24-month tenors yet by smaller increments, from 6.24% and 6.76% to 6.25% and 6.80% in September 2018. Similarly, the banking sector was also inclined to raise lending rates, with the weighted average rising 7bps on the previous period to reach 11.01% (yoy) in September 2018.

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

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