The improvement in recent economic indicators, such as general inflation, core inflation, IKK, PMI, and trade surplus, shows that Indonesia is still consistently on the path to economic recovery. However, recently, the economic recovery agenda has faced significant threats due to the increase in Covid-19 cases, which almost reached 10 thousand new daily cases recorded in mid-June. The reemergence of a health crisis emergency in the near future will be too burdensome for the economy as this will delay all progress and economic recovery efforts that are already underway. From the external side, the market enjoyed capital inflows due to positive investor sentiment regarding economic performance. However, the market is also aware that the threat of tapering off the Fed, which has the potential to take place earlier than expected, still exists. With increasing domestic uncertainty from rising Covid-19 transmission coupled with forecasts of external pressure from the US tapering off, we
sees that BI needs to maintain exchange rate and financial market stability and maintain the policy interest rate at 3,50% this month.

Download (PDF, 1.49MB)