UOB Group’s Economist Enrico Tanuwidjaja and Junior Economist Agus Santoso comment on the latest interest rate 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 Apr’s MPC meeting, in line with consensus expectation.”

“BI remains of the view that inflation expectations are anchored and lower than previous expectations, and that rupiah stability will continue. Specifically, BI expects that headline and core inflation rates have returned to BI's target range of 2-4% from its highest levels in Sep last year.”

“In line with IMF forecast, outlook for Indonesia’s economy and financial markets and rupiah stability has improved. We are keeping BI rate to stay at current level of 5.75%, with the possibility of a 25bps rate cut in early 2024.”