The improvement of the latest economic indicators, including headline and core inflation, CCI, PMI, and trade surpluses, shows that Indonesia is staying on track for economic recovery. However, the economic recovery agenda faces a significant threat recently due to the rising of Covid-19 cases where almost 10 thousand new daily cases taped in mid-June. Any resurgence of emergency of the health crisis in the near future will be too costly for the economy as it will put back all economic recovery progress and efforts. From the external side, the market has been enjoying capital inflow resulted from the investors’ positive sentiment towards economic performance. Nevertheless, the market is also fully aware that the threat of earlier-than-expected tapering off by the Fed is still lingering. With the rising domestic uncertainty of Covid-19 transmission coupled with foreseen external pressure from the US’s tapering off, we see that BI needs to maintain the exchange rate and financial market stability and hold its policy rate at 3.50% this month.

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