Today’s decision by Bank Indonesia (BI) to hold its reference rate steady at 6.75% was anticipated given recent downside surprises in headline inflation. However, core inflation continues to climb while the economy is set to grow at an above-trend pace in 2011-12. The upshot is that we believe the reference rate will be raised soon. We forecast a hike in June, followed by more tightening this year.
Subscriber content
Read this in full, free
Start a free trial and use one of your 10 free starter credits to unlock this piece.