Indonesia: BI kept rates unchanged – UOB

Economist at UOB Group Enrico Tanuwidjaja, Haris Handy and Yari Mayaseti review the latest BI event.

Key Takeaways

“Bank Indonesia (BI) kept its benchmark rate unchanged at 3.50% at its August 2021 monetary policy meeting (MPC). Consequently, BI maintained the Deposit Facility rate at 2.75%, as well as the Lending Facility rate at 4.25%. BI stated that the decision is consistent with the need to maintain the exchange rate and financial system amid low inflation, and for the economy to recover from the pandemic impact.”

“In addition, BI will also continue to optimize the entire policy mix through various policy measures…”

“With the current global developments, we are of the view that BI has less room to trim its benchmark rate further. Nonetheless, BI will keep its accommodative monetary policy via other monetary, macroprudential, and liquidity-supporting measures to effectively transmit the lowering of the benchmark interest rate so far into the economy. We keep our BI rate forecast to stay at current level of 3.50% for the rest of the year.”

 

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