BI Board of Governor Meeting

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The higher consumption due to the fasting month of Ramadhan and ahead of Eid-al-Fitr celebration coupled with the soaring commodity prices during the inflationary pressures have contributed to high headline inflation in April, with the highest contribution coming from volatile and food ingredients components. In contrast, energy prices were still manageable as the GoI continued to implement the energy subsidy and compensation as well as social protection, thus, people’s purchasing power maintained and core inflation remained relatively low. On domestic conditions, Indonesia continued to record positive growth in Q1-2022, supported by persistent domestic consumption, recovery in investment, and higher exports due to soaring commodity prices. The robust economic performance and surging commodity prices help manage the capital outflow during the Fed’s monetary tightening to fight the inflationary pressures. The favorable economic growth and manageable core inflation provide room for BI to maintain its policy rate at 3.50% in this month’s BI Board of Governor meeting.…
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The continuation of supply chain disruption and energy shortage as the impact of Russia and Ukraine’s conflict in various parts of the world have put pressures on the global inflation and the economic recovery process. Domestically, it has started to have impact as the inflation rate is also expected to accelerate this month like its usual seasonal trend during Ramadan and Eid al-Fitr celebrations. However, the trade balance emerged as one of the windfalls from the prolonged increasing trend of commodity prices that could maintain Rupiah stability and economic growth from export channel, also contribute to the state’s revenue.  Considering the current condition, we view BI should hold its policy rate at 3.50% this month. In addition, BI should maintain its pro-stability monetary stance and progrowth macroprudential policy during the current uncertain times.…
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The global economy was not particularly in good condition recently. The uneven domestic demand recovery, continuation of supply chain disruption, and energy shortage in various parts of the world have created an inflation problem that serves as a hiccup to Covid-19 economic recovery. The outbreak of war served as fuel to the flame of current global economic issues, especially inflation, as it triggers the rapid rise in energy and food commodity prices. On a global level, the current economy is facing health and war crisis at the same time. On domestic prospects, fortunately, the impact of recent global development is relatively benign at the moment. However, the risks of future inflation driven by the upcoming Ramadan period, relaxation of social restriction, rising energy and food prices will put policymakers, especially BI, in a tough position ahead. Thus, keeping the policy rate at 3.50% shall be appropriate.…
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After the Delta outbreak, Indonesia is currently facing the Omicron wave. As of 7th February, daily new cases were reported at more than 27,000 cases (7-day moving average) and many predicted it will peak at the end of February 2022.   Despite rising cases, several economic indicators keep progressing, indicating recovery still remains. Similar to GDP that recorded an immense growth of 5.02% (y.o.y) in Q4-2021, yearly inflation rate also drew the same pattern with a notable pick-up of 2.18% (y.o.y) in January 2022 from 1.84% (y.o.y) in December 2022.  However, the recent surge of Omicron cases is expected to slow, or even pause, the economic recovery. From the external side, inflationary pressure that continues to linger around several markets forces several central banks to raise the interest rate. As a result, contractions in domestic market are detected in the short-term, indicated by notable amount of outflow and weaker trend of Rupiah. Given these  circumstances, BI should hold its policy rate at 3.50% this month while observing domestic condition and closely watching the fluctuations in the global market.…
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Consumption and production activities gradually rebound and approaching normal level, as indicated by an increase in inflation and above-target tax revenue. However, public may not have full confidence yet as the GoI confirmed the first first recorded case of Omicron variant in December when daily confirmed cases were around 200 and it has been rising since then amid local transmission of the variant, as evidenced by a slight decrease in both CCI and PMI.  Rising interest rates in several countries as well as the plan to hike interest rates in major economies pose risks, particularly to emerging economies. Additionally, global supply chain disruptions and rising inflation in many countries may force developing countries to begin raising interest rates sooner. However, considering below-the-target inflation and supporting the ongoing economic recovery, BI should continue to hold its policy rate at 3.50% this month.…
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  Domestic economic activity continues to improve, in line with improving public confidence as captured by rising inflation as well as the CCI and PMI.  However, the rise in Covid-19 new cases in several countries due to the novel Omicron variant that appears to be spreading faster poses a very high global risk, which could triggering a new wave. The retightening of government-imposed social restriction and lockdown are becoming inevitable, and these jeopardize any recovery that global supply chains have made around the world. Global market risks have also risen in the last month as a result of earlier monetary policy tightening due to the trend of rising inflation. Government’s effort to prevent massive spike in Omicron cases is critical in order to maintain the economic recovery momentum. Meanwhile, BI needs to maintain Rupiah amid economic recovery by holding the benchmark interest rate at 3.50% this month.…
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The latest development has been quite eventful. The combination of massive stimulus injection in the past and sooner-than-expected rise in aggregate demand has pushed countries to curb the inflationary pressure by applyingmonetary tightening, and one of those countries is the US, which officially started its tapering off earlier this month. On the domestic side, daily cases of Covid-19 is being managed well lately and create a new momentum for economic rebound. Any disruption to the real sector revival is the last thing we want. Considering these factors, any monetary easing might amplify the flows of capital reversal and we are nowhere near to implement monetary tightening; lest we would harm the real sector recovery. Thus, keeping the policy rate at 3.50% shall be appropriate.…
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