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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

Indonesia CPI Inflation 2.57% y-o-y (consensus 2.55%) in Jan-24

- Indonesia's CPI inflation stood at 2.57% y-o-y in January 2024, broadly in line with the consensus estimate of 2.55% and the previous 2.61% pace.
- The current inflation rate is 0.89pp below the one-year average, showing a successfully sustained steadying at a lower level.

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

• Bank Indonesia's decision to maintain the BI-Rate at 6.00% aligns with the economic consensus, balancing global economic moderation and robust domestic economic growth with a focus on Rupiah stability and inflation control.
• Inflation management within the target range and a strong Balance of Payments position, marked by sustained trade surplus and foreign capital inflows, will be central to future interest rate decisions.
• The continued use and optimization of innovative monetary instruments, including SRBI, SVBI, and SUVBI, will play a critical role in Bank Indonesia’s future strategies, influencing liquidity management, Rupiah stability, and the ability to attract foreign investments.