Indonesia: BI could start raising rates in H2 2022 – UOB

Pablo Piovano FXStreet

Enrico Tanuwidjaja, Economist at UOB Group, assesses the recent BI interest rate decision.

Key Takeaways

“Bank Indonesia (BI) kept its benchmark rate (7-Day Reverse Repo) unchanged at 3.50% at its June MPC meeting. Consequently, BI maintained the Deposit Facility rate at 2.75% as well as the Lending Facility rate at 4.25%.”

“The policy of liquidity normalisation has been accelerated through a gradual increase in Reserve Requirement (RR) for Conventional Bank from the current 5% to 6% starting this month, and further to 7.5% starting next month and to reach 9.0% starting on 1 September 2022.”

“We keep our view for BI to start hiking in 2H22, with two 25bps hikes in 3Q 2022 to 4.00%, followed by another two 25bps hikes in 4Q, taking its benchmark rate to 4.5% by the end of 2022.”

Author

Pablo Piovano

FXStreet

Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.

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