- The ongoing banking sector turmoil may require US and European banks to increase their deposit rates, forcing banks to choose either to lower their margin or increase the lending rate.
- Tighter lending rates would be detrimental to US consumer demand, worsening the outlook for Indonesia’s manufacturing sector which also has to grapple with intensifying competition from cheaper imported goods.
- The anaemic domestic manufacturing sector and lower depreciation risks amid improving global USD liquidity may incentivise BI to maintain its pro-growth posture.
