In the opinion of Lee Sue Ann, Economist at UOB Group, the Bank Indonesia could raise the key rate by half percentage point at Thursday’s meeting.

Key Quotes

“BI said that the decision to deliver back-to-back 50bps rate hike was a front-loaded, pre-emptive, and forward-looking step to anticipate and mitigate the risk of rising inflation and anchor inflation expectations to remain within the 2-4% range in 1H23.”

“As such, we had brought forward our BI rate forecast to 5.25% (previously 5.00%) by the end of 2022 and revised higher the terminal rate to 5.75% (previously 5.50%) that is likely to occur in 1Q23.”