Indonesian Macro Update - BI Rate Update 20 Nov 2024
KBVS MACRO UPDATE
Wednesday, 20 November 2024
The BI Rate Maintained at 6.00% : Still A Pro-Stability Stance
The Bank Indonesia RDG, in line with its pro-stability policy, decided to maintain the benchmark interest rate at 6.00% (Cons: 6.00%, KBVS: 5.75%, Prev: 6.00%). This decision primarily aims to preserve Rupiah stability amid global geopolitical uncertainties and the potential pause in Fed rate cuts in Dec ’24 and along 1Q25. On the other hand, both headline and core inflation, which remain within Bank Indonesia's target range, provide room for further potential BI rate cuts in the future.
Then, with global geopolitical risks still uncertain, the ongoing risk-off sentiment driven by high US Treasury yields, and expectations regarding Trump’s policies as his finance minister appointment awaits, we anticipate that Bank Indonesia will remain highly cautious and data-dependent in its approach to future interest rate decisions, despite the likelihood of a 25 bps Fed rate cut in Dec ‘24.
Regards,
Fikri C Permana