Last month's interest rate cuts, which occurred twice in a row, reflected a slightly belated response to weak domestic demand, which led to an increased risk of inflation being at or below the lower end of BI's target (4±1%). From the domestic side, core inflation is starting to become more stable, showing signs that consumption will rise again in the next few months, even though credit growth is still below 10%. From the external side, there are signs that the main central banks are showing signs towards normalizing (tightening) monetary policy. We estimate that an interest rate hike in the US will not occur until December. This allows Bank Indonesia to maintain interest rates while maintaining its ability to respond to changes in important economic data or the latest developments in the next few months.

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