BI Rate VS BI 7-days Reverse Repo Rate, Which is Effective and Efficient?

What it Seven Days Repo Rate?
Bank Indonesia (BI) has endorsed the Seven Days Reverse Repo Rate (7 days repo rate) as interest rates on new policy replaces the BI rate on August 19, 2016 last. This step is a BI strategy in an effort to make more effective monetary policy transmission BI, because there is a difference (disparity) the interest rate that is too wide between the BI rate, Deposit Facility (DF), Lending Facility (LF) and the interest rate of interbank money market (interbank ). For example, when the BI rate at 6.75% interest rate known LF DF 7.25% and 4.25%, so between the LF and the BI rate of 0.5% while adrift between DF and BI rate adrift of 2%, as a proportion this does not quite fit, ideally between LF and DF closed to within 0.5% of the BI rate.

From here it is necessary to instruments that bring BI to the DF to cut the time (the short term interest rate small) then wore seven days repo rate. Where, BI withdrew funds from banks by selling securities or debt securities, interest rate debt securities using the BI rate in a period of a week, for buyers will bear interest at 7 days repo rate and promised to sell it back before seven days. Because the use of collateral securities or debt securities of BI, the transactions under this instrument is not used as an activity between the bank and its customers. While the BI rate subsequently used as the BI interest for a tenor of one year, as well as certificates of deposit.

As an Analyst of Economic Data
Since the time limit be narrowed, from which was one year with an adjustment period of three months, to just seven days with the possibility of a period of adjustment under three months, or faster than before. Surely it would create historical data more than ever before, meaning that within a period of one to five years will be obtained the data changes (fluctuates) particularly relevant benchmark interest rate for new BI is because historical data is an important part of an analysis technique (as input ) and processed by a particular method so as to produce an outcome analysis (as output) and then made a decision. For example, the analysis I have done in predicting the value of BI rate ahead with the target population data from 2004 to 2011 (approximately eight years) only gained as much as 74 datum (N = 74), if the policy has been carried out from the first may be the data collected will be. That is, in a relatively narrow will create more historical data, so it does not take too long to collect data to support analysis.

From the analysis I have done, using 47 economic variables in the target population data from 2004 to 2011. It is known, that should the BI rate had to be at the level of 8.1% (or close to) since the end of 2012 (forecast adjustment) so that the line graph the adjustment is not too dipped sharply upward sloping however, and I believe every monetary policy made a sudden sharp will influence also on other economic variables. This is evidenced by changes in the current BI rate by mid to late 2013, the adjustments by BI done fast so that the line graph fall sharply upwards (yellow circle). Wherein, the possibility of impact occurs in mid to late 2015, the rupiah no longer can be controlled up by Rp. 14,000 / US dollar

Conclusion
I think, actually using BI rate as a reference rate are effective, depending how to predict global economic conditions both domestically and abroad, to then determine the effective value of BI rate to be achieved in the future. Because BI rate is the way the world looked at the economic conditions in Indonesia. Investors will invest in Indonesia if the BI rate to rise (although it is time to rise) with a tenor of one year. Instead BI rate had to be in trim a percentage (although it is time to lower the BI rate) with a tenor of one year. Nevertheless, is not pessimistic about the BI's policy recently, as I have explained in earlier that changed the tenor of monetary operations from one year to seven days can also be received, upon the condition of the global economy will affect the Indonesian economy, and when it is the right to react.

Thanks.