Indonesian Macro Update - BI Rate Update 22 Mar 2024
KBVS MACRO UPDATE
Friday, 22 March 2024
Awaiting The Interest Rate Pivoting
Bank Indonesia (BI) continues to demonstrate its Pro-Stability policy stance by maintaining the BI Rate at 6.00% (Cons: 6.00%, KBVS: 6.00%, Prev: 6.00%). BI also anticipates a potential Fed rate cut in 2H24, which we foresee BI will likely follow suit. Meanwhile, the Fed also maintained Fed Rate at 5.50% (Cons: 5.50%, Prev: 5.50%) with three potential cuts this year according to The Fed's Dot Plot.
We anticipate that this will promptly lower the UST10Y to approximately 4.0% to 4.1% in early Apr '24, with a subsequent aim to approach the 3.5% level ahead of the first anticipated rate cut by the end of 1H24. Simultaneously, we project that this will create the possibility of a reduction in the BI Rate in Jun or Jul '24, consequently contributing to a sentiment-driven decrease in SUN10Y yields to around 6.5% in early Apr '24 and 6.2% by the end of 1H24.
Regards,
Fikri C Permana - KBVS Research Team