MACROECONOMIC ANALYSIS SERIES. BI Board of Governor Meeting, July 2018

Bank Indonesia’s decision to raise 7-days Reverse Repo Rate by 100 bps in the last three months have shown meaningful results with relatively  table Rupiah in the last two weeks.  Clear and strong signals from Bank Indonesia that they prioritize exchange rate stability has reduced uncertainties in the market due to Federal Reserve’s decision to raise Fed Fund rate faster. With lower volatility in the global market compared to last month and absence of further negative factors, Bank Indonesia has ample room to hold its benchmark rate this Thursday, given that domestic inflation is still very low. Going forward, Bank Indonesia still needs to closely monitor potential sources of downward  pressure for Rupiah, such as ongoing trade war between United States, China, and EU or price volatility of key export commodities.

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