Indonesia: BI keeps rates unchanged – UOB

Pablo Piovano FXStreet

Economist at UOB Group Enrico Tanuwidjaja reviews the latest interest rate decision by the Bank Indonesia (BI).

Key Takeaways

“Bank Indonesia (BI) kept its benchmark rate (7-Day Reverse Repo) unchanged at 3.50% at its May 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 will be accelerated through a gradual increase in Reserve Requirement (RR) for Conventional Bank from the current 5% to 6% starting on 1 June 2022, and further to 7.5% starting on 1 July 2022 and to 9.0% starting on 1 September 2022.”

“We keep our view for BI to start hiking in mid-2022, with two 25 bps hikes in 3Q 2022 to 4.00%, followed by another two 25 bps 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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