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DBS: Bank Indonesia Guns For Rupiah Stability With A Surprise Hike

INDONESIA CENTRAL BANK

In light of Today’s hike DBS write “in a move that is reminiscent of its hawkish posture in 2018, we expect the authorities to keep the door open for further policy tightening to mitigate risks from a potentially higher U.S. terminal rate and to support the domestic BOP position.”

  • “Short-end rates have already been guided higher to resurrect returns and attract investors.”
  • “BI expects the Fed to tighten policy further in December, which could fan the US dollar and narrow rate differentials yet again.”
  • “Against this backdrop, we build in the risk of one more rate hike this quarter to take the domestic policy rate to a peak of 6.25%, before returning to an extended pause in 1H 2024.”
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com

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