Noting the return of capital inflows and the rupiah's appreciation as favourable factors for the economy, Agung said BI remained wary of the impact of the El Niño weather pattern on inflation, which he said was among risks BI was monitoring before deciding to cut rates. "Inflation is...declining faster than expected. We are happy. But of course we remain vigilant," he said. (Reporting by Neil Jerome Morales in Cebu; Writing by Gayatri Suroyo; Editing by Kanupriya Kapoor)
CEBU, Philippines, May 15 (Reuters) - It's too early for
Indonesia's central bank to consider cutting interest rates, a
member of the bank's board of governors said on Monday, even as
the country's inflation eases but concerns over slowing growth
mount as exports slow.
Bank Indonesia (BI) has kept policy rates unchanged since
its last rate hike in January and repeatedly said its rate
hikes, totalling 225 basis points since last year, were
sufficient to guide inflation back to within target in the
second half of 2023.
"It is too early to say when we will cut. Yes, the core
inflation is already even lower than 3%. But of course there are
some risks still," Juda Agung, BI's deputy governor and a member
of the rate-setting board, told Reuters on the sidelines of a
conference co-hosted by the Philippines' central bank and the
International Monetary Fund.
With markets expecting the U.S. Federal Reserve to pause its
tightening cycle and Indonesia's inflation cooling to just above
BI's 2% to 4% target range, some analysts expected the central
bank to start considering easing monetary policy in coming
months.
Indonesia's headline inflation, which peaked at 5.95% in
September 2022 amid rising global commodity prices, eased to
4.33% last month. Core inflation has stayed below 3% since
March.
April trade data, which showed exports from the
resource-rich country slumped but the trade surplus remained
high at $3.9 billion, strengthened the case for BI to cut rates,
some economists said.
Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.