Economists believe Indonesia’s central bank would raise its key interest rate faster and soon than initially expected to compensate for the country’s late entry into the monetary tightening zone.
In a research conducted between November 3 to 10, analysts predicted that Bank Indonesia’s seven-day reverse repurchase rate.
Which is currently 4.75%, will increase by a full percentage point by March.
Following that, policymakers are expected to pause for the remainder of 2023.
In order to support the stability of the Indonesian rupiah.
Which has recently been under some pressure, Bank Indonesia is likely to increase rates by 100 bps. Since the third-quarter GDP growth result was better than anticipated.
The central bank has more leeway to tighten policy aggressively now that core inflation is increasing.
By the 2nd quarter of next year, a 5% terminal rate forecast by a similar survey conduct in August.
According to the most recent study, forecasts for price inflation were increase at least up to the 1st quater of 2024. With yearly predictions increased to 4.36% & 4% in 2022 and the following year.
Respectively, inflation for such current quarter is anticipat to average 5.88% instead of the previously observe 5.15%.
In a second survey of 9 economists, over half indicated that the largest danger to the economy in the coming year was a slowdown in global growth.
While a third said that the biggest risk was tighter financial conditions around the world.
According to Eve Barre, an economist at Coface, “export markets favourably contributed to the economy’s performance in recent quarters, aided by strong commodity prices.
But a notable downturn in global trade could make Indonesia lose a significant driver of GDP growth next year.”