Indonesian Rupiah: BI expected to extend policy pause – BBH

Brown Brothers Harriman’s Elias Haddad anticipates Bank Indonesia (BI) will maintain its policy rate at 5.75% for a second consecutive meeting after 100 basis points of tightening since May. With Indonesian Rupiah (IDR) pressures subsiding and inflation remaining within the bank's 1.5%-3.5% target range, Haddad believes a policy pause is feasible.

BI is anticipated to hold rates at 5.75% for the second straight meeting on Wednesday. The policy pause is plausible as BI has managed to tighten interest rates by 100 basis points since May. The recent decline in IDR and stable inflation within the target range provide BI with the opportunity to pause its monetary tightening. This meeting will see Destry Damayanti assume the role of BI governor for the first time.

Prior to her appointment, Damayanti served as the top deputy to former Governor Perry Warjiyo, who unexpectedly stepped down for personal reasons two years before the end of his second five-year term.