Even though it eased due to falling food prices, inflation was still far above BI's target range, which was recorded at 5,95% (yoy) in October 2022, following an increase in subsidized fuel prices in early September 2022. In addition, the Rupiah continued to depreciate to IDR 15,487 per US Dollar in mid-November 2022. The Fed is still expected to raise interest rates in December, albeit at a slower pace. These three factors show that BI still needs to increase its benchmark interest rate by 50bps this month to 5,25% in an effort to manage inflation expectations and maintain the stability of the Rupiah. Strong economic growth in Quarter-III 2022 supported by growth in household consumption provides justification for BI to continue the monetary tightening cycle.

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