Inflation in November 2022 was recorded at 5,42% (yoy), continuing its slowing pattern in the last three months. The combination of seasonal factors and efforts to control inflation by the government and central bank have resulted in inflation figures being lower and declining more quickly from their peak towards the end of 2022. On the other hand, the anticipated reduction in the aggressiveness of interest rate increases by various central banks in developed countries has encouraged the flow of inflation. capital enters developing countries, including Indonesia. Since mid-November, net capital inflows reached USD2,12 billion, driving the appreciation of the Rupiah which once touched IDR15.500 and lowering the yield on 10-year and 1-year Indonesian government debt securities to 7,02% and 5,49% respectively. 25%. Therefore, we view BI as needing to reduce the aggressiveness of monetary policy by increasing the benchmark interest rate by 5,50bps to XNUMX% this month.

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