Indonesia Macro Update - BI Rate Update 18 Jul 2024
KBVS MACRO UPDATE
Thursday, 18 July 2024
The BI Rate Remains at 6.25%
Bank Indonesia (BI) has maintained the BI Rate at 6.25%. During this RDG, BI also highlighted that the financial system's resilience remains robust. BI contends that there is no crowding-out effect in Indonesia.
Going forward, we interpret that BI will continue to optimize its securities instruments, proceed with triple interventions, and strengthen the BI term repo as well as its competitive FX swaps. Consistent with its commitment to remain active in both the SBN and exchange rate markets, BI aims to ensure stability. We expect this to maintain a more guarded movement in SUN yields. Additionally, despite BI projecting the Fed Rate cut to occur in Nov '24, we anticipate a potential earlier reduction in the Fed Rate as early as Sep '24, allowing BI to likewise lower its BI Rate in the same month.
Regards,
Fikri C Permana - KBVS Research