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

Although easing due to lower food prices, inflation is still far above BI’s target range at 5.95% (y.o.y) in October 2022, following the increase in subsidized fuel prices in early September 2022. On top of that, Rupiah continued to depreciate to IDR15,487 per US Dollar in mid-November. Globally, the Fed is expected to continue its rate hike rally in December, although at a slower pace.  These three combined suggested that BI still need to increase its policy rate by 50bps this month to 5.25% in an effort to manage inflation expectation and to keep Rupiah stable. Robust economic growth in Q3-2022, supported by intact household consumption growth, provides justification for BI to continue its monetary tightening cycle.

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