Indonesia skyline

Indonesia Monetary Policy February 2023

Indonesia: Central Bank stands pat in February; signals end of tightening cycle

At its monetary policy meeting on 15–16 February, Bank Indonesia (BI) kept the seven-day reverse repo rate unchanged at 5.75%, marking the end of its tightening cycle. The Bank also kept the deposit facility rate and lending facility rate unchanged at 5.00% and 6.50%, respectively.

The Bank decided to stand pat as it deemed previous hikes sufficient to anchor inflation expectations and bring inflation within its 2.0–4.0% target range. Meanwhile, it stated that it is managing export proceeds in order to support the rupiah and control imported inflation. The Bank expects core inflation to move within the target range of 3.0–4.0% in H1 2023, while headline inflation should return to the target in H2 2023.

The Bank’s forward guidance was muted, suggesting it will keep the current monetary policy setting unchanged for the time being until core inflation moves back within the target. Our panel also expects rates to remain close to their current level this year.

Nicholas Mapa, senior economist at ING, commented on the outlook:

“BI indicated that it is coordinating with government officials on the planned regulation for exporter earnings which may have lowered the need to utilise rate increases to steady the IDR. […] We believe BI can opt to stay dovish in the near term should inflation sustain its downward path and IDR remain stable.”

The Bank is expected to meet on 15–16 March.

Free sample report

Access essential information in the shortest time possible. FocusEconomics provide hundreds of consensus forecast reports from the most reputable economic research authorities in the world.
Close Left Media Arrows Left Media Circles Right Media Arrows Right Media Circles Arrow Quote Wave Address Email Telephone Man in front of screen with line chart Document with bar chart and magnifying glass Application window with bar chart Target with arrow Line Chart Stopwatch Globe with arrows Document with bar chart in front of screen Bar chart with magnifying glass and dollar sign Lightbulb Document with bookmark Laptop with download icon Calendar Icon Nav Menu Arrow Arrow Right Long Icon Arrow Right Icon Chevron Right Icon Chevron Left Icon Briefcase Icon Linkedin In Icon Full Linkedin Icon Filter Facebook Linkedin Twitter Pinterest