BI Board of Governor's Meeting, September 2022

Jahen Rezki, Syahda Sabrina (), Nauli A. Desdiani (), Teuku Riefky, Amalia Cesarina, Meila Husna () and Faradina Alifia Maizar ()
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Syahda Sabrina: Institute for Economic and Social Research, Faculty of Economics and Business, Universitas Indonesia (LPEM FEB UI)
Nauli A. Desdiani: Institute for Economic and Social Research, Faculty of Economics and Business, Universitas Indonesia (LPEM FEB UI)
Meila Husna: Institute for Economic and Social Research, Faculty of Economics and Business, Universitas Indonesia (LPEM FEB UI)
Faradina Alifia Maizar: Institute for Economic and Social Research, Faculty of Economics and Business, Universitas Indonesia (LPEM FEB UI)

No 202209, LPEM FEBUI BI Board of Governor Meeting Brief from LPEM, Faculty of Economics and Business, University of Indonesia

Abstract: A though inflation eased in August 2022, it is still well above BI’s target range and expected to accelerate in the remaining months of 2022 following the fuel price hike. From external side, the Fed’s aggressive move on interest rate hikes, combined with external pressures, will continue to have an adverse impact on emerging markets, including Indonesia, in terms of capital outflows. As a result, Rupiah depreciated to a level of around IDR15,000 per USD in the last few days. Therefore, we see that BI needs to increase its policy rate by 25 bps to 4.00% in order to maintain inflation expectations and curb future inflationary pressures, given the government’s decision of raising subsidized fuel prices earlier this month. In addition, as a pre-emptive measure following the Fed's decision on their policy rates that may induce another round of flight-to-safety moves from risky global assets, we see that it is also the right momentum for BI to start preparing a more comprehensive stabilization strategy for maintaining the exchange rate.

Keywords: gdp; —; economic; —; economic; outlook; —; inflation; —; macroeconomics; —; interest; rate (search for similar items in EconPapers)
Date: 2022-09, Revised 2022-09
New Economics Papers: this item is included in nep-des and nep-sea
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