Key takeaways from BI Board meeting:
1. BI change their FFR expectation to be higher for longer (previously FFR cut by c.75bp in 2H24). BI said that global economic uncertainty impacted Rupiah to be on weakening trend, but confident that Rupiah stability will be restored in FY24.
2. On domestic economy, BI kept its domestic economic growth at 4.7-5.5% for FY24. Similarly, BI maintained its inflation target at c.1.5-3.5% in FY24. In addition, BI said that Indonesia balance of payment will be on surplus, while the current account deficit will be at c.-0.1% to -0.9% of GDP in FY24F.
3. Domestic banking system's remains resilient, reflected in ample AL/DPK ratio at 27.2% in Mar24 (27.4% in Feb24). Meanwhile, CAR recorded at 27.7% in Feb24 (27.5% in Jan24), with NPL at 2.4% gross/0.8% net. Meanwhile private loan edged up to +12.4% yoy (+11.3% yoy in Feb24 - FY24 target at 10-12% yoy).
Our take:
We see the increase in the policy rate to be imperative on maintaining Rupiah stability and wethink another 25bp increase is possible next month. This is due to the ineffectiveness of the FX reserves use (US$6bn as of Mar24) to shape the Rupiah volatility (tripled since end of Mar24 at around 4.0 index point to around 13.5 index point in mid-Apr24). For now, we keep our economic growth expectation to be at c.+5.1% in FY24 vs. +5.0% in FY23. (Indo Premier Research)
Sumber : IPS
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