Start Braking on New Debt

The government is trying to put a brake on the issuance of new debt in the form of government securities (SBN)

because it considers global risks that have the potential to suppress demand for SBN and increase yields or yields. The Governor of Bank Indonesia, Perry Warjiyo, said that pressure on SBN yields could occur if the United States raises US Treasury yields. "Yesterday the figure was 2.3 percent and it is likely to increase. If it increases, then by market mechanism there will be pressure on SBN yields," said Perry at a press conference of the Financial System Stability Committee, yesterday. He said he would coordinate with the Ministry of Finance to discuss the fair yield of SBN which would remain attractive to foreign capital. The increase in US Treasury yields is only one of the risks that BI is anticipating, in addition to the potential increase in US central bank interest rates and the impact of the Russia-Ukraine war on interest rates. global interest. BI estimates that the Federal Reserve's interest rate hike will be larger than previously predicted. "We estimate five times the other day, with a high increase in US inflation and the impact of Russia-Ukraine geopolitics. We predict a seven-fold increase in the Fed Fund Rate and possibly higher," said Perry.

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