Indonesian Macro Update - BI Rate Update 17 Oct 2024

KBVS MACRO UPDATE
Thursday, 17 October 2024

The BI Rate Maintained at 6.00% : Pro-Stability Stance

The decision to maintain the BI Rate at 6.00% (Cons: 6.00%, KBVS: 6.00%, Prev: 6.00%) reflects a pro-stability approach aimed at ensuring inflation remains within the target range of 2.5±1% for 2024 and 2025, while simultaneously supporting sustainable economic growth. We view this as an effort to maintain the interest rate differential between the BI Rate and the Fed Rate at 100 bps. These measures are expected to be complemented by fiscal policy announcements from the new cabinet in the coming days, ensuring monetary stability as we approach this critical juncture.

Looking ahead, with global geopolitical risks still uncertain, the possibility of a significant stimulus from China, and the US presidential election on November 5, we strongly commend BI’s decision. However, with the anticipated Fed Rate cut, we hope that BI will follow suit in the coming months, as it aligns with efforts to maintain inflation control and Rupiah stability.

 

Regards,

Fikri C Permana - KBVS Research Team

Unduh