- The external conditions remain uncertain, yet the Indonesian financial market has been stabilising as insurance and pension funds are looking to purchase more equities while banks are returning to the SBN market.
- The higher demand for SBN from banks likely reflects the weakening demand for financing in the real sector rather than an improvement in banks’ liquidity condition.
- The currently stable market may encourage BI to tune up its dovish signal, but the onus to improve the liquidity condition rests primarily on the public sector.
