- BI and the Fed kept their policy rate unchanged, as returning inflationary pressures encouraged the Fed to strengthen its hawkish signal while the renewed pressure on the IDR discouraged BI from resuming its rate-cutting campaign.
- Rising oil prices may make BI more sensitive to the short-term movement in the IDR’s value, as further depreciation in the IDR may translate negatively to the government’s fiscal posture.
- BI’s interventions have yielded limited results in stimulating loan growth, as rising funding costs – compounded by deteriorating credit quality – hamstrung banks’ capacity to expand their loan portfolios.
