Indonesia Macro Update - BI Rate Update 21 Jun 2024
KBVS MACRO UPDATE
Friday, 21 June 2024
BI-Rate Maintained at 6.25%; Enhanced Macroprudential Policy
The BI Rate has been maintained at 6.25% (Cons: 6.25%, KBVS: 6.25%, Prev: 6.25%). We believe this decision aligns with (a) the stable inflation rate and (b) the dovish stance adopted by several major economies.
However, concerns about the Rupiah's depreciation trend over the past month, driven by capital outflows and worries about a rising fiscal deficit, have also garnered BI's attention. In response, BI has refined its countercyclical macroprudential policy on the Bank's Foreign Exchange Funding Ratio (RPLN), effective from Aug 1st, ‘24. We hope this will mitigate the risk of sudden capital reversals. Additionally, we encourage BI to further enhance effective intervention and communication to ensure the stability of the Rupiah. Therefore, we also hope for at least one 25 bps reduction in the BI Rate by the end of 2024.
Regards,
Fikri C Permana - KBVS Research