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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.

Indonesia CPI Inflation 2.75% y-o-y (consensus 2.6%) in Feb-24

- Indonesia's CPI inflation increased to 2.75% year-on-year in February 2024, contrary to the consensus forecast for stability at 2.6%.
- The CPI inflation rate remains below the one-year average by 0.53 percentage points, and core inflation matched expectations by staying at 1.68%.

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

• Bank Indonesia's decision to hold the BI-Rate at 6.00% balances persistent financial market uncertainties against strong domestic economic growth and the need for Rupiah stabilization.
• Anticipated pressures from the global financial environment and domestic economic activities will dictate the future direction of interest rate policies, with a continued emphasis on ensuring Rupiah stability and controlling inflation within the set targets.
• The central bank's commitment to leveraging pro-market monetary tools and enhancing financial system digitalization underscores a forward-looking approach to monetary policy aimed at bolstering economic resilience and inclusion.

Four Important EM Elections in 2024

• Elections in Indonesia and India should both result in policy continuity as far as the economy is concerned. In South Africa, the election outcome will likely lead to a further deterioration in governance. As for Mexico, MORENA will probably retain the presidency but fall short of its target two-thirds majority in the legislature.

By Alastair Newton