Indonesian Macro Update - BI Rate Update 18 Dec 2024
KBVS MACRO UPDATE
Wednesday, 18 December 2024
BI Rate Stayed at 6.00%, but Room for Cuts Remains Open
Bank Indonesia (BI) continues to adopt a pro-stability policy stance by maintaining the BI rate at 6.00% (Cons: 6.00%, KBVS: 5.75%, Prev: 6.00%). We believe this decision triggered by BI’s concern on potential Rupiah volatility in the coming period. In this RDG, BI also provided a statement regarding the coordination of policies between BI and the Ministry of Finance in 2025.
However, the cautious sentiment demonstrated by BI signals a careful and wait-and-see approach in the financial markets. That said, we anticipate that demand-side support from the real sector. This is also supported by inflation rate. As such, BI still has ample room to lower rates in 2025 from the real sector perspective, with a note of Rupiah stability must also be maintained.
Regards,
KBVS Research Team