Highlight
- Plan to ditch the BI Rate, a non-transactional policy rate, and adopting the BI 7-day Repo rate is a very good move towards a more confident and transparent guide by BI in the market.
- In the RDG meeting today, BI should keep the policy rates unchanged.
Bank Indonesia should hold its policy rates at Thursday meeting, particularly in light of slightly increasing inflation toward upper bound target and potentially increasing Rupiah volatility in the near term. Global factors, such as slowing Chinese economy, reduced appetite for emerging market asset classes and Brexit may also compel investors to unwind, or at least reduce inflow to Rupiah-denominated securities and put downward pressures on Rupiah in the near term.
