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Indonesia inflation expectations coming down near central bank’s forecast

CNA – Indonesia’s central bank governor Perry Warjiyo said yesterday inflation expectations were coming down rapidly after Bank Indonesia (BI) started hiking interest rates aggressively four months ago.

He told a central banking forum in Bangkok that the consensus forecast for Indonesia’s inflation was at 6.9 per cent four months ago, but now is approaching 5.5 per cent, BI’s forecast.

“After we aggressively responded through interest rates, the gap between consensus forecast and our forecast is narrowing,” he said, reiterating the need for a “front-loaded, pre- emptive and forward-looking” interest rate policy.

BI has hiked the benchmark interest rate by 175 basis points in the past four months.

Warjiyo reiterated BI’s goal to lower core inflation back to its target range of two per cent to four per cent in the first half of 2023 and lower the headline inflation to within target by the second half of next year.

Indonesia’s annual headline inflation in November eased to 5.42 per cent from 5.71 per cent in October.

Indonesia’s central bank governor Perry Warjiyo. PHOTO: CNA

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