Investment Recommendation by Danamon Following Key Interest Rate Slash

Press Release / 08 October 2024

Share

Jakarta, 8 October 2024 — At the Board of Governors' Meeting in September, the Indonesian Central Bank, Bank Indonesia (BI), decided to lower its benchmark interest rate from 6.25% to 6.00%. This interest rate cut is the first since February 2021. It is important to note that previously, BI had raised its benchmark rate, the BI7DRR, by a total of 275 bps from August 2022 to April 2024, moving it from 3.50% to 6.25%. The BI rate cut follows the anticipated announcement of a reduction in the US benchmark rate, the Federal Funds Rate (FFR), by The Fed, which reduced its rate by 50 bps to 4.75-5.0%.

It is also worth noting that the latest Fed dot-plot indicates the potential for further interest rate cuts through 2026, with the FOMC predicting that the FFR will be around 3.5% in 2025 and approximately 3% in 2026. These rate cuts are necessary to restore price stability and maintain the public's purchasing power. As a result, many customers are shifting to long-term investment instruments, moving away from purchasing durable goods, which previously drove domestic economic growth.

The Indonesia Economic Outlook report, published by PT Bank Danamon Indonesia Tbk (“Danamon”) in August 2024, noted that the running income index had previously declined in almost all segments, especially among the middle class. This has led to consumer hesitation in purchasing durable goods, such as new vehicles, reflecting caution during this period of global uncertainty.

 “We see that the possibility of interest rate cuts has the potential to support the inflow of foreign investors into domestic financial instruments, considering low domestic inflation, the maintenance of macroeconomic stability, and the domestic yields that are still higher compared to peer countries, which could ultimately stabilize or strengthen the Rupiah exchange rate,” said Hosianna Evalita Situmorang, Economist at PT Bank Danamon Indonesia Tbk.

With this interest rate cut, investment in fixed-income instruments such as Bonds and Fixed Income Mutual Funds becomes more attractive due to the higher returns. Furthermore, the government is currently offering Retail Government Bonds (ORI), specifically ORI026, which includes ORI026T3 with a 6.3% coupon (for a 3-year tenor) and ORI026T6 with a 6.4% coupon (for a 6-year tenor) per year. ORI026 can be purchased from 30 September until 24 October 2024, and is available through e-SBN or online via digital investment platforms and digital banking applications that are official distribution partners of ORI026.

Amidst these dynamics, the banking sector plays an essential role in helping the public adapt by providing information and recommendations regarding investments and the necessary products and services for investing. This is why Danamon offers the proper investment product recommendations through its Wealth Management product range, helping customers maximize their investment returns during declining interest rates. As part of this effort, Danamon regularly publishes the Product Focus, issued by the Market Strategist & Investment Advisory team each quarter. This publication provides additional information on investment product recommendations based on analyses of relevant economic factors and indicators.

Danamon customers can also access daily and monthly Market Insights published by the Market Strategist & Investment Advisory team and macroeconomic analysis and projections prepared by Danamon’s Treasury Economist Team through the Economic Corner service on Danamon’s website. For Danamon Privilege customers, one of the available services is Wealth Advisory, which offers personalized guidance and recommendations in asset management from certified Personal Advisors.

After receiving investment product recommendations, Danamon customers can choose from a wide range of investment and Wealth Management products, such as Mutual Funds, Bonds, Foreign Exchange, and structured products offered by Danamon, to build a portfolio suited to their risk profiles. For instance, Danamon customers can easily purchase ORI026 through the D-Bank PRO mobile banking app via the Investment and Insurance menu. In the Bonds menu, customers can view the product highlights for both types of ORI026, including coupon rates, maturities, minimum and maximum order amounts, the offering period, and the Information Memorandum for each ORI026. Once they have a SID, customers can choose which product to buy and place an order.

Ivan Jaya, Consumer Funding & Wealth Business Head at PT Bank Danamon Indonesia Tbk, explained, “As a customer-centric organization, Danamon is always committed to providing the latest market developments to help customers make the best decisions to optimize their investment returns. Danamon is committed to offering the right, timely, and relevant investment product recommendations, complemented by a range of products tailored to each customer's needs and risk profile, as well as the ease of investing both offline and online through the D-Bank PRO app, so our customers can invest any time, anywhere. This aligns with our goal to provide comprehensive financial solutions so that customers can Grow with Danamon Group.”

Furthermore, Danamon actively provides financial information and education to the public through various platforms, such as the Danamon Financial Friday program, the Danamon mini-series highlighting multiple financial trends, and introducing Danamon products suitable for customers at every stage of life.

For more information about Danamon Financial Friday, watch new episodes every Friday of the month at bdi.co.id/dffplaylist. Information about Market Insights and Indonesia Market Color can be accessed at https://bdi.co.id/insight. 

###

Untuk pertanyaan media, mohon hubungi: