Inflation has ticked up yet again, now the highest since April 2024. Bank Indonesia due to meet on 19th Nov. Most analyst say they’ll either hold the benchmark rate or cut by another 0.25%. Yet, with inflation nearing the top end of BI’s target range, we’re more confident of either a further hold or, if inflation continues upward then we say there’s real potential for a benchmark rate rise before year’s end.
Bank Indonesia’s (BI) October decision to hold the benchmark rate at 4.75% surprised many analysts – but not us. Our eyes were firmly fixed on inflation, noting recent unrest too, and we were concerned that September’s 0.25% cut was too much, too soon. We were correct, and it seems BI realized this when they held the benchmark rate in October. It seems that most analysts are now expecting a further rate cut by the BI when they meet on 19th November – we’re not. We anticipate a further hold, but we think there’s potential for a return to 5% should inflation keep trending upward. Tr...
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