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Indonesia Policy Rate 6.25% (consensus 6.25%) in May-24

• Bank Indonesia maintained the BI-Rate at 6.25% in May, following the surprise rate hike in April, aligning with market expectations to stabilize the Rupiah and manage inflation within the 2.5 ± 1% target range.
• Future interest rate decisions will be influenced by ongoing global financial market uncertainties, particularly US economic conditions and geopolitical risks, alongside robust domestic economic performance and growth projections.
• Ensuring Rupiah stability and managing CPI inflation within the target range is central to Bank Indonesia's strategy, supported by monetary, macroprudential, and payment system policies to foster sustainable economic growth.

Indonesia CPI Inflation 3.0% y-o-y (consensus 3.1%) in Apr-24

- Indonesia's CPI inflation rate in April 2024 rounded down to 3.0% y-o-y, marginally below market expectations of 3.06%.
- The slight downside news was in non-core components as the core rate crept up by 5bps to 1.77% (consensus 1.76%).

Indonesia Policy Rate 6.25% (consensus 6.0%) in Apr-24

• Bank Indonesia unexpectedly raised the BI-Rate by 25bps to 6.25%, defying the consensus forecast as it aims to stabilize the Rupiah and curb inflation amid global financial uncertainties.
• The rate hike is a strategic response to external pressures and inflation risks, ensuring that inflation remains within the 2.5 ± 1% target range through preemptive monetary tightening.
• Despite the rate increase, Bank Indonesia maintains a pro-growth approach through supportive macroprudential policies and enhancements to the payment system, promoting economic expansion and financial system stability.

Indonesia Policy Rate 6.0% (consensus 6.0%) in Mar-24

• Bank Indonesia unsurprisingly maintained the BI-Rate at 6.00% amid a cautiously optimistic global economic outlook and strong domestic growth projections for 2024.
• Future policy decisions will continue to emphasize Rupiah stability and keeping inflation within the 2.5 ± 1% target amid external uncertainties and internal pressures from volatile food prices.
• Bank Indonesia remains committed to supporting sustainable economic growth and expanding financial inclusion through macroprudential relaxations and advancing payment system digitalization, alongside strengthening international cooperation and policy synergies at the national level.