Indonesia skyline

Indonesia Monetary Policy October 2024

Indonesia: Central Bank leaves rates unchanged in October

BI hold meets market expectations: At its meeting on 15–16 October, Bank Indonesia (BI) decided to maintain the BI-Rate at 6.00%. The decision followed September’s cut and aligned with market expectations.

Rupiah weakness prompts hold: BI highlighted that its key short-term focus is to ensure rupiah stability; the Bank intervened in recent weeks to stop the currency slumping against the USD. Therefore, in light of the rupiah’s recent downtrend and increasing global market uncertainty, BI deemed it necessary to pause its monetary easing cycle. The Bank’s also noted that its decision remained consistent with maintaining inflation within the 1.5–3.5% target corridor for 2024 and 2025, and supporting sustainable economic growth.

BI retains a dovish tone: The Central Bank stated that it would consider lowering the policy rate ahead if inflation remains within target, the rupiah stable, and economic growth robust. Against this backdrop, our Consensus is for additional cuts by end-2024 and in 2025, with a cumulative reduction of around 100 basis points. The next meeting is scheduled for 19–20 November.

Panelist insight: Nomura analysts commented:

“We continue to expect one more 25bp cut this year to 5.75%, more likely in December than November, given US election-related uncertainty. Considering BI’s dovish comment that it will monitor scope for further easing, and its pro-growth stance in supporting domestic demand, we think today’s pause is temporary. Beyond this year, we expect an additional 75bp in cuts in H1 2025 by BI, bringing the policy rate to 5.0% and total rate cuts in this cycle to 125bp.”

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 X Download Fullscreen