Indonesia Macro Update - BI7DRR Update 24 Nov 2023
KBVS MACRO UPDATE
Friday, 24 November 2023
BI Maintains BI7DRR at 6.00%, Strengthening Monetary-Fiscal Policy Coordination
Bank Indonesia (BI) has chosen to keep the BI7DRR rate at 6.00% (Cons: 6.00%, KBVS: 6.00%, Prev: 6.00%). An intriguing aspect of this RDG BI is BI's statement explicitly mentioning, "The coordination between Bank Indonesia's policies and the government's fiscal policies continues to be enhanced to maintain macroeconomic stability and support economic growth."
Moreover, in this RDG, BI reiterated its pro-growth stance. This is evident from the strengthened effectiveness in implementing Macroprudential Liquidity Incentive Policies (KLM) amounting to IDR138.0 tn from 1 Oct '23, to Nov '23. This will be complemented by reinforcing communication, socialization, and coordination with the Government, financial authorities, Ministries/Agencies, banking sector, and business entities. Additionally, BI continues to promote the deepening of the Base Interest Rate for Loans (SBDK) transparency policy, focusing on interest rates for credits in 10 economic sectors to stimulate the Policy Interest Rate Transmission. This is expected to be facilitated by reinforcing the pro-market nature of monetary operational strategies. We further anticipated this will prompt BI to maintain the Bi7DRR at the level of 6.00% until the end of 2023, with the potential for a quicker decrease in 2024.
Regards,
Fikri C Permana - KBVS Research Team