Influenced by rising global energy and food prices as well as the seasonal pattern of Christmas and year-end celebrations, Indonesia closed 2022 with general inflation of 5,51% (yoy), where this level is far above BI's target corridor. Meanwhile, the Rupiah appreciated slightly in mid-January to around IDR 15.100 per US dollar, supported by a slight increase in capital inflows as inflation subsided in most economies and most central banks began to reduce their level of aggressiveness. The Fed is expected to continue its "hawkish" stance in early 2023. The combination of the three suggests that BI still needs to raise its policy interest rate this month by 25bps in an effort to maintain Rupiah stability and reduce inflationary pressures.
