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Interest rates are determined by central bank. They may be adjusted to stimulate or curb a country's economic growth. For Indonesia, this role falls to Bank Indonesia (BI), which has focused on managing inflation and keeping the rupiah stable.
Over the past few years, BI has raised interest rates to keep pace with the US Federal Reserve rate hikes. But this may change in the second half of 2024. DBS economists think that BI may begin to cut rates towards the end of the year.
This will definitely affect businesses, individuals and ultimately your investments. But understanding the impact and having a strategy for investing will help you ride the wave with confidence.
In general, low interest rate stimulates economic growth and increases inflation. This is because it is cheaper for businesses to borrow.
With a reduced cost for businesses to borrow money, businesses will likely embark on growth projects such as business acquisitions and expansions and product developments
Savings are less attractive due to lower Deposit rates; individuals are likely to invest spare cash into investment instruments for better returns.
In general, high interest rates cool an overheated economy and reduce inflation. This is because higher interest rates make borrowing costs impede business plans, and businesses will likely halt or reduce growth projects. Savings are more attractive due to higher Deposit rates; individuals may consider investing in assets, businesses or sectors that will benefit from rising interest rates.
Instrument Type | Product Name |
Bond | • FR101 • FR100 • INDON28NN • INDON42 |
Equity Mutual Fund | • BNP Paribas Sri-Kehati • BNP Paribas IDX Growth 30 • Eastspring Investment Value Discovery • Eastspring Investment Alpha Navigator • Manulife Saham Syariah Asia Pacific • Batavia Technology Sharia Equity USD • BNP Paribas Global Technology Titans 50 • Schroder Global Sharia Equity Fund • Mandiri Global Sharia Equity Dollar • BNP Paribas Cakra Syariah USD |
Fixed Income Mutual Fund | • Ashmore Dana Obligasi Unggulan Nusantara • Manulife Pendapatan Bulanan II • Manulife USD Fixed Income • BNP Paribas Prima USD |
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