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Abstract:
This study aims to analyze the effect of lending rate and deposit interest rate to inflation rate in Australia, South Korea, and Indonesia. This paper observed 42 data with 3 cross-section countries which have the Financial Services Authority. This paper utilizes lending rate, deposit interest rate, and inflation (consumer price index) generated from World Bank from 2004 to 2017. This paper employs panel data method. Chow test result revealed that the lending rate has a positive effect on the inflation rate. Meanwhile, the deposit interest rate has a negative relationship with the inflation rate. The F test simultaneously revealed that the Prob (F-statistic) value is 0.0000 which < 0.05. Thus, the independent variable simultaneously affects the dependent variable. Meanwhile, the partial T-test revealed that the t table is less than t calculated that is 3.296102 > 2.02269. Thus, it rejects the null hypothesis (Ho). It means that the lending rate has a positive effect on the inflation rate. Meanwhile, the t calculated of deposit interest rate is less than t table that is -2.497266 < 2.02269. Thus, the null hypothesis (Ho) is accepted. It indicates that the deposit interest rate affects inflation rate negatively.
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