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MNI BI Preview – July 2021: Sitting Tight, Next Move Likely Up

EXECUTIVE SUMMARY

  • Policymakers are expected to leave the 7-Day Reverse Repo Rate unchanged, even as Indonesia has become the global epicentre of the Covid-19 pandemic, while consumer-price inflation remains benign.
  • Concerns about rupiah weakness and Fed taper talk doing the rounds are set to discourage Bank Indonesia from adding monetary stimulus.
  • In a recent interview, Bank Indonesia Governor Warjiyo suggested that the policy rate will be maintained at its current level, while policy normalisation could begin next year.

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