Bank Indonesia : Money Supply Moderates in November 2017

Broad money (M2), as a measure of liquidity in the economy, experienced slower growth in November 2017. M2 stood at Rp5,320.0 trillion, with growth moderating from 10.6% (yoy) the month earlier to 9.3% (yoy) as all components decelerated. More subdued narrow money (M1) growth was reported, falling from 16.0% (yoy) to 13.1% (yoy) in November 2017, while quasi-money slowed from 8.7% (yoy) to 7.9% (yoy).

Based on the affecting factors, M2 growth mainly driven by a contraction in Central Government financial operations as well as sluggish loan growth and Net Foreign Assets (NFA). The contraction was indicated by an increase of obligations on the Central Government in the form of deposits held by Bank Indonesia and the banking industry, which jumped significantly from 9.8% (yoy) the month earlier to 25.5% (yoy) in November 2017. Furthermore, Banks loans recorded at Rp4,635.0 in the reporting period, with growth decelarating from 8.1% (yoy) to 7.4% (yoy). Meanwhile, growth of Net Foreign Assets (NFA) declined from 18.1% (yoy) in October 2017 to 17.2% (yoy) in November 2017.

Lending and deposit rates continues a declining trend, reflecting the ongoing transmission of Bank Indonesia's reduction to the BI 7-Day (Reverse) Repo Rate. Lending rates averaged 11.45% in the reporting period, falling 10bps on the previous month. Similarly, commercial banks also lowered interest rates on 1, 3, 6, 12 and 24-month term deposits from 5.89%, 6.32%, 6.74%, 6.93% and 6.93% to 5.80%, 6.17%, 6.63%, 6.82% and 6.72%

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