MACROECONOMIC ANALYSIS SERIES: BI Board of Governor Meeting, January 2022

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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