BusinessOpportunity for Rate Cuts in Indonesia: Waiting for Rupiah Strength

Opportunity for Rate Cuts in Indonesia: Waiting for Rupiah Strength

Indonesia central bank: should be room to cut rates, awaiting stronger rupiah © Reuters. FILE PHOTO: Bank Indonesia’s logo is seen at Bank Indonesia headquarters in Jakarta, Indonesia, September 2, 2020. REUTERS/Ajeng Dinar Ulfiana/File Photo

Exciting news from PADALARANG, Indonesia! Indonesia’s central bank is considering lowering interest rates this year to boost economic growth, as Governor Perry Warjiyo mentioned, all while eagerly anticipating a stronger rupiah against the dollar.

“If we rush while the global condition is in disequilibrium, the rupiah could weaken and inflation goes out of control,” he told a media gathering. He said global economic fragmentation caused the disequilibrium.

Amid all this, Bank Indonesia (BI) raised its key policy rate by 250 basis points from August 2022 to October 2023 to 6% to ensure rupiah stability and keep inflation under control.

Warjiyo has hinted at the possibility of loosening monetary policy in the second half of this year, riding on the easing global uncertainty and potential U.S. interest rate adjustments by the Federal Reserve.

On the other hand, inflation in Southeast Asia’s largest economy in January eased further to 2.57%, inching closer to the midpoint of the central bank’s target range this year of 1.5% to 3.5%.

Stay tuned for more updates on this developing story as the central bank navigates through the current economic landscape.  » …

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