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MNI Bank Indonesia Preview – July 2024: On Hold, BI Has Other Tools To Support IDR & Growth

Bank Indonesia (BI) meets on July 17 and is unanimously expected to leave rates as 6.25% as inflation remains well within the 1.5-3.5% band and the rupiah has strengthened since the last meeting.

Asia Bank - PreviewHomepageBank of Indonesia - PreviewEM Central Bank ReportsEM Central Bank PreviewEmerging Market News

EXECUTIVE SUMMARY:

  • Bank Indonesia (BI) meets on July 17 and is unanimously expected to leave rates as 6.25% as inflation remains well within the 1.5-3.5% band and the rupiah has strengthened since the last meeting. However, FX stability will remain the central bank's focus and rates are likely to be unchanged until the Fed eases and the IDR has strengthened further and consistently.
  • BI has a numerous tools and we expect it to continue using macroprudential policies to support the economy. On the FX front, Governor Warjiyo said that he prefers to use non-rate tools to defend the rupiah, such as intervention and money market deepening securities.
  • Bank Indonesia is likely not only to hold rates at 6.25% in July but also in the months ahead as it waits to be confident that the rupiah has sustainably strengthened and of the timing of the first Fed rate cut. We don’t believe it will risk FX stability by cutting ahead of the US.

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BI Preview - July 2024.pdf

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EXECUTIVE SUMMARY:

  • Bank Indonesia (BI) meets on July 17 and is unanimously expected to leave rates as 6.25% as inflation remains well within the 1.5-3.5% band and the rupiah has strengthened since the last meeting. However, FX stability will remain the central bank's focus and rates are likely to be unchanged until the Fed eases and the IDR has strengthened further and consistently.
  • BI has a numerous tools and we expect it to continue using macroprudential policies to support the economy. On the FX front, Governor Warjiyo said that he prefers to use non-rate tools to defend the rupiah, such as intervention and money market deepening securities.
  • Bank Indonesia is likely not only to hold rates at 6.25% in July but also in the months ahead as it waits to be confident that the rupiah has sustainably strengthened and of the timing of the first Fed rate cut. We don’t believe it will risk FX stability by cutting ahead of the US.

Click here to see full preview:

BI Preview - July 2024.pdf