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Dovish Bank Indonesia in no hurry to raise rates

Bank Indonesia left interest rates unchanged today and the dovish tone from the press conference suggests the central bank is in no rush to tighten policy. We are maintaining our view the central bank will raise interest rates by just 25bps this year. Asia Drop-In (26th May, 0900 BST/16:00 SGT): Can Asia remain the low inflation exception? Join our 20-minute briefing about the region’s price and policy outlooks. Register here.
Gareth Leather Senior Asia Economist
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Emerging Asia Chart Book

Thai economy to receive tourism boost

After more than two years in the doldrums, Thailand’s tourism sector is finally showing signs of life. Arrivals in May reached 520,000 – a 77% increase from the previous month and 19% of the level reached in the same month of 2019. Spending by foreign tourists was equivalent to over 10% of GDP before the pandemic began, and a steady recovery in the sector will provide an important boost to the struggling economy – Thailand was the only major country in the region where GDP was still below its pre-pandemic level in the first quarter. A stronger recovery should provide the central bank with the confidence it needs to begin tightening monetary policy. Despite surging inflation, the Bank of Thailand has been one of the few central banks in the region not to hike rates this year as it has prioritised supporting the economy. Our forecast is that the BoT will finally raise interest rates at its August meeting. Asia Drop-In (30th June, 09:00 BST/16:00 SGT): Are Asia’s central banks behind the curve? Can the Bank of Japan and People’s Bank of China continue to go against the grain? Find out in our special session on what global monetary tightening looks like in Asia. Register now.  

27 June 2022

Emerging Asia Economics Weekly

Singapore overheating fears, BSP forecast change

There are growing signs that Singapore’s economy is overheating, with inflation now nearly double the target and wages increasing rapidly. However, we do not expect the MAS to respond by tightening monetary policy further. We expect growth to slow in the second half of the year, which should help to cool underlying price pressures, while a reopening of the international border should help to ease labour shortages. Asia Drop-In (30th June, 09:00 BST/16:00 SGT): Are Asia’s central banks behind the curve? Can the Bank of Japan and People’s Bank of China continue to go against the grain? Find out in our special session on what global monetary tightening looks like in Asia. Register now.  

24 June 2022

Emerging Asia Economics Update

Low inflation means BI is in little hurry to raise rates

Bank Indonesia left interest rates unchanged again today, and the relative weakness of inflation means any tightening cycle is unlikely to be aggressive. We are maintaining our view the central bank will raise interest rates by just 25bps this year. Asia Drop-In (30th June, 09:00 BST/16:00 SGT): Are Asia’s central banks behind the curve? Can the Bank of Japan and People’s Bank of China continue to go against the grain? Find out in our special session on what global monetary tightening looks like in Asia. Register now.  

23 June 2022

More from Gareth Leather

Emerging Asia Economics Weekly

Asia late to tightening but won’t have to go far

Central banks in India, the Philippines and Malaysia have all raised interest rates for the first time this cycle in recent weeks, and we expect further hikes next week in Indonesia, Korea and Pakistan. But with inflation set to fall back in the second half of the year and growth likely to weaken, tightening cycles are unlikely to be aggressive. Our forecasts are generally more dovish than the consensus.
Asia Drop-In (26th May, 0900 BST/16:00 SGT): Can Asia remain the low inflation exception? Join our 20-minute briefing about the region’s price and policy outlooks. Register here.

20 May 2022

Emerging Asia Economics Update

Asia to remain inflation outlier

Despite surging global food and fuel prices, inflation across most of Emerging Asia looks set to remain relatively low. This is the key reason why tightening cycles in the region will be much more gradual than elsewhere.

17 May 2022

Emerging Asia Data Response

Thailand GDP (Q1)

Following continued growth in the first quarter, the pace of the recovery will largely depend on how quickly tourists return now that the country has fully reopened to foreign visitors. Emerging Asia Drop-In (26th May): Can Emerging Asia remain the global low inflation exception? Economists from our Emerging Asia team will discuss the region’s growth, inflation and policy outlooks in this special 20-minute online briefing. Register now.

17 May 2022
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