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Bank Indonesia's Rate Hold Likely Temporary

Dow Jones
Sep 24

0059 GMT - Bank Indonesia's current hold is likely temporary rather than the conclusion of the tightening cycle, UOB economist Enrico Tanuwidjaja says in a note. BI indicates that currency stability remains the primary policy objective, while supporting growth takes a secondary role in the current environment, he notes. BI continues to support domestic demand and credit growth through accommodative macroprudential measures, but remains alert to risks from global financial-market volatility, a strong U.S. dollar and potential upward pressure from energy prices. The rupiah's relative resilience in recent weeks, along with the 100 bps of pre-emptive tightening already delivered, reduces the urgency for an immediate rate increase, he adds. UOB expects two additional 25bp rate hikes in 4Q and 1Q 2027 to bring the policy rate to 6.25%.

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