LPEM COMMENTARY BI BOARD OF GOVERNORS’ MEETING APRIL 2016

Highlight

  • Plan to ditch BI Rate, a non-transactional policy rate, and adopting the BI 7-day Repo rate is a very good move towards a more confident and transparent guide by BI in the market.
  • In the RDG meeting today, BI should keep the policy rates unchanged.

Bank Indonesia should hold its policy rates on Thursday meeting, particularly in light of slightly increasing inflation toward upper bound target and potentially increasing Rupiah volatility in the nearterm. Global factors, such as slowing Chinese economy, reduced appetite for emerging market asset classes and Brexit may also compel investors to unwind, or at least reducing inflow to Rupiahdenominated securities and put downward pressures on Rupiah in the near term.

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