Inflation generally moves according to seasonal patterns. After two months of deflation, prices are starting to trend towards the year-end shopping season related to Christmas and New Year. The impact of the increase in non-subsidized fuel prices is starting to be slightly visible in inflation figures. Strengthening domestic demand along with easing external sector pressures, especially driven by expectations of easing trade war pressures, can be a reason to be optimistic about market developments. The movement of the Rupiah reflects several of the developments above. Bank Indonesia can maintain its policy interest rate at the Board of Governors Meeting this Thursday. We view that BI will need to raise rates
policy interest in December.

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