The Indonesian central bank increased the benchmark interest rate by 25 basis points to 6.25% in its monthly policy meeting on Wednesday, April 24, 2024. This marked the first interest rate hike since October 2023. After the meeting, Bank Indonesia (BI) Governor Perry Warjiyo said that the rate hike aims to strengthen the Rupiah amid worsening global risks and to ensure inflation remains within the target of 2.5+/-1% in 2024. The Rupiah has depreciated by nearly 5% against the US Dollar this year, raising concerns about imported inflation. Bank Indonesia also pledged to step up its foreign exchange interventions, as well as let money-market rates rise to attract more foreign inflows. Earlier, BI had significantly increased the premiums on its Rupiah securities to attract capital inflows, while the government ordered state-owned companies to hold back on large dollar purchases and imports of consumer goods. BI has made it clear that supporting the Rupiah remains their top priority for the coming months. With the heightened external uncertainties, particularly regarding the US Federal Reserve's rate trajectory and elevated geopolitical tensions, analysts have said that further hikes cannot be ruled out. BI so far maintained its growth outlook for Indonesia at a range of 4.7%-5.5% this year, compared to last year's 5.05% growth, on the back of strong domestic demand. (ICE GIACARTA)

Fonte notizia: Indonesia Trade and Economic Weekly - 26 April 2024