MACROECONOMIC ANALYSIS SERIES: BI Board of Governor Meeting, July 2021

The rising number of confirmed Covid-19 cases is expected to put the brakes on economic recovery. All economic indicators, such as inflation, CCI, PMI, trade surplus, started to demonstrate a grim outlook. We expect these indicators to continue to plunge in July especially after the government decided to implement partial lockdown in Java and Bali. From external conditions, Rupiah moves rather sideways as investors weigh in recent development in Covid-19 cases and how major central banks’ stances are. Despite the need to spur economic growth, there is simply no room for BI to change its policy as the supply side remains muted. To maintain the exchange rate and financial stability under the uncertainty of the Covid-19 crisis, we see that BI needs to hold the policy rate at 3.50% this month.

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