- BI maintains policy rate at 3.50%, as economic recovery is put on ice amid the surge of Delta variant.
- BI sees a slower GDP outlook at 3.5 – 4.3%, and as such views next year to be a more appropriate timeline for gradual exit from accommodative policy.
- External risks that could derail such policy are muted for now, thanks to (1) lower global yields amid Delta wave; (2) lower oil prices after OPEC deal; and (3) the government’s ability to control inflation.
- While system-wide liquidity remains ample, there is apparently a liquidity squeeze in certain sectors and amongst low-income households.
- Given heightened risk perception and low financial inclusion, the more appropriate way of addressing this liquidity squeeze is through fiscal rather than monetary policy.
