Fixed Income Update 19 Dec 2024
KBVS WEEKLY FIXED INCOME UPDATE
Thursday, 19 December 2024
Preparing for Rate Cuts Amid a Hawkish Stance
The anticipation of central bank policy adjustments has reignited discussions on the delicate balance between monetary easing and maintaining a hawkish stance. This is in line with inward-looking policies that have fueled concerns over rising inflation in the US and the potential for a fragmented global economy in the future.
Bank Indonesia (BI) has responded by holding the BI Rate steady at 6.00% for the fourth consecutive time, despite Indonesia's actual inflation data and inflation expectations remaining at the lower end of BI's target range. Meanwhile, the planned implementation of a 12% VAT on luxury goods, set to take effect on Jan 1, ‘25, warrants close attention. Although initially aimed at luxury items, there is growing concern that its broader application could erode overall consumer purchasing power in the long term.
Regards,
KBVS Research Team