VIEW: Goldmans Sees BI On Hold As Inflation Moderates

Indonesian CPI inflation was lower than expected in May and down on April. Headline CPI rose 4% y/y down from 4.3% the previous month, the top of the target band, and core was 2.7% down from 2.8%.

• “Transportation inflation slowed to 10.6% yoy in May (vs. 12% yoy in April) due to downward adjustments in non-subsidized petrol prices. This shaved 17bp from headline inflation relative to the previous month. Despite the increase in some food prices, food inflation also slowed to 4.3% yoy in May (vs. 4.6% yoy in April), shaving another 8bp from headline inflation.”
• “With the Fed tightening cycle likely over, declining headline inflation and the more stable IDR, we continue to expect Bank Indonesia to keep policy rates on hold in coming months. The next scheduled BI meeting is on June 21-22.”