- BI rate stays at 3.50%, as the effectiveness of monetary policy is hampered by high risk premia, especially due to Covid.
- The good news is that the economy looks to emerge quite robustly from the Delta wave, while loan intermediation is turning the corner thanks to appetite for consumer loans.
- Fed’s apparent plan to start tapering this year has not led to an increase in UST yields as yet, but future “taper selloff(s)” is still quite likely given the distortive effect of excess liquidity in recent months.
- Nonetheless, BI’s liftoff timeline in H2-22 is still tenable given Indonesia’s improving external balance vis-à-vis pre-pandemic.
