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MNI BI Preview - January 2024: Extended Pause, IDR Still Soft

INDONESIA CENTRAL BANK
  • Bank Indonesia (BI) meets on January 17 and is unanimously expected to keep the BI-rate at 6% (name change from BI 7-day Reverse Repo Rate), where they have been since the last hike in October. With inflation well within the downwardly revised 2024 band of 1.5-3.5% but the rupiah at uncomfortable levels, FX stabilisation is likely to remain the central bank’s focus.
  • While inflation is well within the downwardly-revised target band, BI is watching food prices, demand and imported inflation closely.
  • BI is not in any hurry to signal that it is ready to begin easing monetary policy and is highly unlikely to do so before the US. But given that the Fed is currently forecasting 75bp of rate reductions in 2024 and there’s significant uncertainty regarding the global economic outlook, the next move in Indonesian rates is likely to be down but after an extended pause.
  • See full preview here.

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