Economist at UOB Group Enrico Tanuwidjaja comments on 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 Jul MPC meeting.”
“BI continue to opt for liquidity normalisation of Rupiah Reserve Requirement (RR) hike to reach 9.0% starting on 1 September 2022 as monetary normalization mechanism.”
“We keep our view for BI to start hiking in 3Q22 (Aug and Sep), 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.”