THE SOAR OF FED RATES ON INDONESIA'S B.I. 7 DAYS REVERSE REPO RATE

  • Juwita PR Suwondo Universitas Merdeka Malang
  • Aris Siswati Universitas Merdeka Malang
  • Much. Samsya Ayatillah Universitas Merdeka Malang
Keywords: Fed Rates, B.I. 7DRRR, Monetary Policy

Abstract

As the Federal Funds Rate (Fed Rates) reached a new series of hikes throughout the year 2022-2023, new studies that aim to investigate the effect of such a hike have been developed in the monetary realm. The act was initiated to tame the inflation rate in the U.S. Federal Open Market Committee's (FOMC) meetings, which resulted in rising Fed Rates repeated several times. As shown in previous studies, the adjustment in U.S. monetary policy affected Asian Countries monetarily. Although only a few studies have yet to research the Fed Rate's effect on Indonesia's central bank interest rate, commonly called B.I. 7DRRR (Bank Indonesia 7 Days Reverse Repo Rate). In line with that, this research aims to analyze the impact of recent Fed Rate hikes in 2022-2023 to B.I. 7DRRR. The research was conducted using both meta-analyses on previous studies using secondary data, on variables such as Fed Rates and BI7DRRR, and using VAR (Vector Autoregression) simultaneously. The result showed that Fed Rates did affect BI7DRRR significantly through the increased rate of BI7DRRR equivalent with the Fed Rates’ hikes.

 

References

Firat, M., Arbatli, E. C., Furceri, D., & Verrier, J. (2022). US Monetary Policy Shock Spillovers: Evidence from Firm-Level Data. Available at SSRN 4268031.
Arteta, C., Kamin, S., & Ruch, F. U. (2022). How Do Rising US Interest Rates Affect Emerging and Developing Economies? It Depends.
Borenstein, M., Hedges, L. V., Higgins, J. P., & Rothstein, H. R. (2021).
Introduction to meta-analysis. John Wiley & Sons
Bowman, D., Londono, J. M., & Sapriza, H. (2015). U.S. unconventional monetary policy and transmission to emerging market economies. Journal of International Money and Finance, 55, 27-59.
Bräuning, F., & Ivashina, V. (2020). U.S. monetary policy and emerging market credit cycles. Journal of Monetary Economics, 112, 57-76.
Central Bank of Indonesia (Bank Indonesia). (2023). B.I. 7-day (Reverse) Repo Rate. https://www.bi.go.id/en/statistik/indikator/bi-7day-rr.aspx (accessed November 21st, 2023)
Chen, M. J., Griffoli, M. T. M., & Sahay, M. R. (2014). Spillovers from United States monetary policy on emerging markets: different this time? International Monetary Fund.
Cortez, M. K. D., Ramiento, S. L. D., & Sese, J. M. E. (2019). Impact of Interest Rates on Bank Risk in the Philippines: A Panel Data Regression Approach. Philippine Management Review, 26.
Geng, Z., Grivoyannis, E., Zhang, S., & He, Y. (2016). The effects of the interest rates on bank risk in China: A panel data regression approach. International Journal of Engineering Business Management, 8, 1847979016662617.
Gilchrist, S., Yue, V., & Zakrajšek, E. (2019). U.S. monetary policy and international bond markets. Journal of Money, Credit and Banking, 51, 127-161.
Data, F. E. (2023). Federal Reserve Bank of St. Louis. Fred. stlouisfed. org. Federal Reserve. (2023). Selected Interest Rates (Daily).
https://www.federalreserve.gov/releases/h15/ (accessed: November 11th, 2023)
Gray, C. (2013). Responding to a monetary superpower: Investigating the behavioural spillovers of U.S. monetary policy. Atlantic Economic Journal, 41, 173-184.
Guénette, J. D., Kose, M. A., & Sugawara, N. (2022). Is a Global Recession Imminent? Available at SSRN.
Ha, J. (2021). Financial market spillovers of U.S. monetary policy shocks. Review of International Economics, 29(5), 1221-1274
Hoek, J., Kamin, S., & Yoldas, E. (2022). Are higher U.S. interest rates always bad news for emerging markets? Journal of International Economics, 137, 103585.
IMF (International Monetary Fund). (2021). Shifting Gears: Monetary Policy Spillovers During the Recovery from COVID-19. In World Economic Outlook, April. Washington, DC: International Monetary Fund.
Kalemli-Özcan, Ṣ. (2019). U.S. monetary policy and international risk spillovers (No. w26297). National Bureau of Economic Research.
Marwansyah, S., & Rusiyati, S. (2019). Dampak Kebijakan BI Rate Repo 7 Days terhadap Kinerja Bank Pemerintah. Jurnal Ecodemica, 3(2), 248-256.
Mishra, M. P., Moriyama, M. K., N'Diaye, P. M. B., & Nguyen, L. (2014). Impact of Fed tapering announcements on emerging markets. International Monetary Fund.
Pigott, T. D., & Polanin, J. R. (2020). Methodological guidance paper: High-quality meta-analysis in a systematic review. Review of Educational Research, 90(1), 24-46.
Rai, I. A. A., & Purnawati, N. K. (2017). faktor-faktor yang mempengaruhi kredit pada bank umum swasta nasional (BUSN) Devisa (Doctoral dissertation, Udayana University).
Salihin, A. (2020). DAMPAK 7-DAY RESERVE REPO RATE BANK INDONESIA DAN NILAI TUKAR RUPIAH TERHADAP PROFITABILITAS PERBANKAN PRIODE 2017-2019. I-ECONOMICS: A Research Journal on Islamic Economics, 6(1), 71-84.
Suwondo, J. P., Kusumowati, D., & Abdullah, F. (2020). Tendensi Forward-Looking Behavior Dalam Kredibilitas Bank Indonesia. Journal of Regional Economics Indonesia, 1(2).
Suwondo, J. (2023). Spillover Effect Normalisasi Kebijakan Moneter AS terhadap Indonesia. Journal of Regional Economics Indonesia, 4(1).
Published
2023-12-30
How to Cite
Juwita PR Suwondo, Aris Siswati, & Much. Samsya Ayatillah. (2023). THE SOAR OF FED RATES ON INDONESIA’S B.I. 7 DAYS REVERSE REPO RATE. INTERNATIONAL SEMINAR, 5, 102-112. https://doi.org/10.36563/proceeding.v5i0.105