Indonesia: BI tightening cycle over? – UOB
|Economist Enrico Tanuwidjaja at UOB Group assesses the latest decision by the Bank Indonesia (BI).
Key Takeaways
“Bank Indonesia (BI) kept its benchmark policy rate (7-Day Reverse Repo) unchanged at 5.75% in Feb MPC meeting, in line with consensus expectation.”
“BI remains of the view that inflation expectations is anchored while continues to view that rupiah stability is here to stay. Specifically, BI is of the view that headline and core inflation have trended back to BI’s target range of 2-4% faster than expected.”
“Today’s MPC decision marks the end of the current hiking cycle, which was started in Aug 2022. Therefore, we revised our BI rate forecast to remain unchanged at 5.75% for the rest of this year and for BI to potentially embark on an asymmetric rate cut cycle in 1H24. At the current level, BI rate still gives a positive but at much tighter spread historically with our expected terminal rate of the Fed funds rate of 5.25% by 2Q23.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.