RBA Raises Interest Rates by 25 Basis Points as Inflation Pressures Persist 
Federal Reserve Faces Subpoena Delay Amid Investigation Into Chair Jerome Powell 
South Africa Eyes ECB Repo Lines as Inflation Eases and Rate Cuts Loom 
BOJ Policymakers Warn Weak Yen Could Fuel Inflation Risks and Delay Rate Action 
Asian Stocks Slip as Tech Rout Deepens, Japan Steadies Ahead of Election 
Trump’s Inflation Claims Clash With Voters’ Cost-of-Living Reality 
Dow Hits 50,000 as U.S. Stocks Stage Strong Rebound Amid AI Volatility 
India–U.S. Interim Trade Pact Cuts Auto Tariffs but Leaves Tesla Out 
Bank of Canada Holds Interest Rate at 2.25% Amid Trade and Global Uncertainty 
Gold and Silver Prices Rebound After Volatile Week Triggered by Fed Nomination 
BOJ Rate Decision in Focus as Yen Weakness and Inflation Shape Market Outlook 
Oil Prices Slide on US-Iran Talks, Dollar Strength and Profit-Taking Pressure 
China Extends Gold Buying Streak as Reserves Surge Despite Volatile Prices 
The Bank Indonesia (BI) maintains a prudent policy stance in the wake of rising expectations of economic recovery. The gross domestic product (GDP) growth momentum is expected to pick up at a gradual pace in the coming months. Also, latest trade data continued to paint an improved outlook for the economy, particularly with the trade data suggesting that import growth has bottomed out, reported DBS Bank in its research note.
Loan growth has ticked up to 8.5 percent y/y in November last year and it is likely to continue rise even in 2017. Inflation is also creeping up higher. CPI inflation is likely to have ticked up to 3.2 percent y/y in the first month of 2017. Also, inflation expectations have gone up alongside the proposed revision in electricity prices while food prices have also been trending higher, they added.
Moreover, the DBS bank in its research note raised its CPI forecast to around average 4.5 percent for 2017, up from 3.5 percent last year. Additionally, as also indicated in the latest statement, Bank Indonesia is closely watching developments in the US and China. Given the need to avoid excessive market volatility, external policy risks matter.
Lastly, the DBS added unless there is a fewer than expected rate hike from the US Fed, it is unlikely that Bank Indonesia will cut its key policy rate further even if the central bank were to maintain an accommodative bias.
