DBS On The Implications Of A Second Term For BI Governor Warjiyo

After Indonesia’s President nominated the incumbent BI Governor Perry Warjiyo for a second term, DBS note that “this decision bodes well for policy stability and continuity, as Governor Warjiyo enjoys the confidence of domestic as well as international markets. While possible on legal grounds, this decision breaks from norm as most past governors have usually served one term. The ruling party’s majority in the parliament will pave the way for the nomination to go through smoothly. Current Finance Minister Indrawati Mulyani was rumoured to be one of the potential contenders for this position, besides BI’s Senior Deputy Governor, amongst others. For now, the benchmark rate is likely to be left on hold in March, with any unexpected bouts of volatility in the rupiah likely to be met by intervention efforts. A sharp realignment in the Fed’s terminal rate expectations might, nonetheless, bring precautionary hikes back in view.”