BI Board of Governor's Meeting, August 2023

Jahen Rezki, Syahda Sabrina (), Teuku Riefky, Amalia Cesarina (), Faradina Alifia Maizar () and Yoshua Caesar Justinus ()
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Syahda Sabrina: Institute for Economic and Social Research, Faculty of Economics and Business, Universitas Indonesia (LPEM FEB UI)
Amalia Cesarina: 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)
Yoshua Caesar Justinus: Institute for Economic and Social Research, Faculty of Economics and Business, Universitas Indonesia (LPEM FEB UI)

No 202308, LPEM FEBUI BI Board of Governor Meeting Brief from LPEM, Faculty of Economics and Business, University of Indonesia

Abstract: Inflation slowed further after the normalization of global prices and the domestic price control program implementation. The economy also grew stronger than expected in the second quarter of this year, thanks to robust domestic demand. External pressures, on the other hand, have intensified as the Fed raised interest rate again at the July FOMC, resulting in capital outflows as well as currency depreciation in EMs. Despite maintaining one of the best performing EMs currencies, Rupiah is weakening as Indonesia’s trade surplus shrinks. BI should be able to manage external pressures on Rupiah amid the Fed’s potential continuation of another interest rate hike before the end of this year. Therefore, we see that BI should hold its policy rate at the current level of 5.75% while monitoring Rupiah stability and maintaining domestic prices.

Keywords: gdp; —; economic; —; economic; outlook; —; inflation; —; macroeconomics; —; interest; rate (search for similar items in EconPapers)
Date: 2023-08, Revised 2023-08
New Economics Papers: this item is included in nep-sea
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