Key takeaways from BI Board meeting:
1. BI sees global uncertainty remained high, although it has eased recently. BI change their FFR expectation to be one time cut in 4Q24 (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 the 2H24.
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 25.6% in Apr24 (27.2% in Mar24). Meanwhile, CAR recorded at 25.9% in Mar24 (27.7% in Feb24), with NPL at 2.3% gross/0.8% net. Meanwhile private loan inched up to +13.1% yoy in Apr24 (+12.4% yoy in Mar24, target at 10-12% yoy in FY24),* while the third party deposit grew by +8% yoy (+7.4% yoy in Mar24).
Our take:
We see the unchanged policy rate to be supportive for promoting more economic activity growth. However, we think another 25bp increase is possible by year-end, should there be another episode of global economic turmoil.This is due to the slimmer FX reserves available for shaping the Rupiah volatility at US$136.2bn (down by US$10.2bn as of Apr24). We expect the Rupiah to average at Rp15.8k/US$ in FY24.




Sumber : IPS