Bank Indonesia Holds Steady as Economy Grows, Eyes Fiscal Ties and Government Spending

  • Indonesia’s central bank keeps rates steady
  • Bank Indonesia holds benchmark rate at 6.25%
  • Domestic demand supports economic growth of 4.7-5.5% in 2024
  • Central bank to strengthen ties between fiscal and macroprudential stimulus
  • Government’s spending plans under scrutiny
  • Rupiah strengthens against dollar due to central bank intervention
  • Rate-cutting cycle dependent on rupiah performance and Fed policy

Indonesia’s central bank, Bank Indonesia, has maintained its benchmark seven-day reverse repo rate at 6.25% following its July policy meeting, as expected. The decision is consistent with the bank’s stance on ensuring inflation stays within a target range of 1.5% to 3.5% this year and next. Domestic demand supports economic growth of 4.7-5.5% in 2024, with last year’s growth at 5.05%. Bank Indonesia Governor Perry Warjiyo said the central bank will continue strengthening ties between government fiscal stimulus and macroprudential stimulus to create sustainable growth from the demand side. The incoming government’s spending plans are under scrutiny, as they may impact public finances. The rupiah has strengthened against the dollar due to the central bank’s exchange-rate stabilization measures. Bank Indonesia will optimize monetary instruments to maintain rupiah stability. The performance of the Indonesian currency will determine the start of rate cuts. The central bank surprised markets with a rate hike in April and has held policy settings steady since then, with the rupiah’s trajectory partly due to robust economic data and other tailwinds.

Factuality Level: 9
Factuality Justification: The article provides accurate and objective information about Indonesia’s central bank decision to hold rates steady, citing the reasons behind it and expert opinions on future policy changes based on economic indicators and global factors. It includes relevant details and quotes from Bank Indonesia Gov. Perry Warjiyo and economists without any personal perspective presented as a universally accepted truth.
Noise Level: 7
Noise Justification: The article provides relevant information about Indonesia’s central bank decision to hold rates steady and offers insights from various experts on the potential future actions of the central bank. However, it does not offer significant new knowledge or actionable insights for readers beyond what is already known in the financial news sphere.
Private Companies: Capital Economics,DBS
Key People: Perry Warjiyo (Bank Indonesia Gov.), Prabowo Subianto (president-elect), Radhika Rao (DBS senior economist), Brian Tan (Barclays economist), Ankita Amajuri (economist)

Financial Relevance: Yes
Financial Markets Impacted: Indonesian central bank’s decision on interest rates, rupiah currency, and potential future rate cuts impact the Indonesian financial markets.
Financial Rating Justification: The article discusses Indonesia’s central bank’s decision to keep its benchmark interest rates steady and its impact on inflation, economic growth, and currency stability. This directly pertains to financial topics such as monetary policy and exchange rates, which can have significant effects on the country’s financial markets and companies operating within it.
Presence Of Extreme Event: No
Nature Of Extreme Event: No
Impact Rating Of The Extreme Event: No
Extreme Rating Justification: There is no mention of an extreme event in the text.

Reported publicly: www.marketwatch.com