Bank Indonesia

Too many people that are sitting in issues.

Imagine if I could come and be a developer and get project financing from the Bank of Indonesia, right? And I just had 30%, and 70% was from there, I think.

I think it's positive that you have a higher entry level to start your developments.

To be clear, I was talking more about

In 50 minutes, of course, we have the KLCI opening as well as examining the outlook for the plantation sector.

But in the meantime, we're going to switch gears and talk about Indonesia's economy because Bank Indonesia has maintained its benchmark interest rate at 5.75% for a third consecutive month as the rupiah remains

under pressure.

The decision also marks the first monetary policy meeting led by Desri Damayanti since taking on the governor post.

He is the ASEAN economist for UOB Group.

Enrico, thank you so much for joining us.

So Bank Indonesia, as we mentioned, has maintained its benchmark interest rate at 5.75% for a third consecutive month.

What do you think were the key considerations behind that decision? What does it tell us about the central bank's priorities?

This is something that the Fed will continue to remain concerned about.

Number three, Bank Indonesia kept its benchmark rate steady yesterday at five point seven five percent in line with market expectations, but it stepped up measures to support the currency as global yields rise.

ANZ economist Dheeraj Nem still expects the central bank to lift rates further during the cycle to six point two five percent.

They've expanded the hedging incentives for a multitude of inflows, which is a clear signal that, you know, as long as there is no risk or major risk to IDR stability, they think that current rate settings and, you know, a multi-pronged toolkit will do the job.

And they're certainly noticing that, you know, a couple of real headline things that have actually, you know, travelled, the news has travelled outside Indonesia, such as the recent conviction of the co-founder of Gojek.

and the resignation, I think it was in July, of the Bank Indonesia governor.

You know, these are the type of events that make investors very nervous.

People are not quite sure what the government in Indonesia is doing.

The People's Bank of China decides Monday and is expected to hold.

Bank Indonesia meets Wednesday and is expected to hike to 6%.

Then Thursday brings the Riksbank, Norges Bank, the Swiss National Bank and Bankshako, all expected to stand still.

So you have an Asian economy tightening into a strong dollar while Europe and Latin America sit on their hands.

For the rest of the region, just a couple of things to highlight in Indonesia, which remains in focus after the finance minister was replaced by the president only after a year in office.

We will have Bank Indonesia's policy rate decision on Wednesday.

We expect the policy rate to be left unchanged again at 5.75% despite the Fed hike.

BI has already hiked by a relatively aggressive 100 basis points earlier, and the currency weakness after the Fed hike still looks manageable in our view from BI's perspective.

Actually, so that's what I wanted to talk to you about next.

I mean, the overall system liquidity, especially when Bank of Indonesia's securities yields are moderating, how's that looking? And will that actually drive some margin pressure for the Indonesian banks?

Yeah, great questions, Dilan.

So overall, we...

Nobody's not looking to say, hey, you know, where should this go? Because every country.

around the world for the most part it has been observing exactly what happened so the bis announced in october 2024 that it was handing the project over to the partners and then here's the observing members so to the project denbridge so you have asian infrastructure asian infrastructure investment bank Banco Central Pilipinas, Bank Indonesia, Bank of France, Bank of Israel, Bank of Italy, Bank of Korea, Bank of Mauritius, Bank of Namibia, Central Bank of Bahrain, Central Bank of Brazil, Central Bank of Chile, Central Bank of Egypt, Central Bank of Jordan.

the list goes on and on and on so you basically go through every country the new york innovation center federal reserve bank of new york reserve bank of australia reserve bank of india south african reserve bank and the world bank but every other countries listen they're including the european central bank so everybody's an observer to it like hey what are these guys doing what's going to actually happen you know how is this going to you know function from a multi-country uh perspective uh is this going to be you know something I mean, I look at all this stuff, Chip, and I think about the euro, how complex and difficult the conversion of many countries when they joined the European Union, converting their currencies to the euro, and how many countries suffered economically as a direct result.

And then who bared the weight of it? Germany bared the majority bulk weight of supporting the EU.