BI holds the benchmark rate at 4.75% after last month’s 0.25% cut.
This caught the market by surprise, but not us – inflation was the key decider, as we forecast.
IDR looks to be slowly regaining some strength as the economy now stabilizes.
Bank Indonesia’s (BI) decision to hold the benchmark rate at 4.75% appears to have surprised many – but not us. Our eyes were firmly fixed on inflation, noting recent unrest too, and we were concerned that last month’s 0.25% cut was too much, too soon. We were correct. Thankfully, BI have decided to hold steady and let things settle for a while before considering another move.
Currency & GDP Effects
As of today, 22 October, the USD/IDR exchange rate was at 16,588. This reflects a mild appreciation over the last month, but we aren’t yet seeing a clear return trajectory towards 2024 levels. As we discuss later on, we are encouraged by Bank Indonesia’s decision to hold the benchmark rate today, and we anticipate a gradual strengthening of the IDR ...
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