From the latest data released by Bank Indonesia, there will be changes and rate action. In January, economists said they would do many things in particular, including a monetary tightening phase. Bank Indonesia also increased the annual benchmark.

BI upped the benchmark seven-day reverse repo rate by 25 basis points (bps) to 5.75%. The lending and deposit facility rates increased by 25 bps to 6.50. The key policy rate will be stable so that it will not negatively influence state-owned and private banks.

"The more calculated decision on the policy rate increase is a follow-up step to ensure continued lower inflation expectations and headline inflation. Meanwhile, for preemptive and forward-looking measures, attempts are made to maintain core inflation.

However, when Perry was asked about the possibility of a further increase, Perry noted that this was sufficient. In other words, it is unlikely that there will be an increase in interest rates shortly. However, all possibilities can still happen later.

BI Also Lowers the Global Economic Growth Projection to 2.3% Despite Increasing Foreign Capital

Core inflation, as measured by the year-on-year rise in consumer prices, excluding government-controlled and volatile food prices, is the primary determinant of BI's interest rate decision. The central bank's target is also in the range of 2 to 4 per cent this month.

The central bank has revised its inflation forecast score from below 4 per cent to below 3.7 per cent. This is the optimism of the Indonesian central bank regarding inflation. From the headline inflation, the bank has maintained its view in a promising direction.

Meanwhile, foreign capital inflows into the domestic financial market and helps the Rupiah to strengthen. Investors now assess that Indonesia's macroeconomic fundamentals are more stable. 

Economic security yields are also one of the main highlights for the Indonesian market. BI data points to US$ 4.6 billion in net portfolio-investment inflows since last week. 

The Central Bank continues to hold back on further changes to its key interest rate for the rest of the year. However, the pressure is still there, and it is hoped that Bank Indonesia can significantly change the outlook. 

The government is also racing against time to import commodities expected to provide room for more economic hikes.  However, what has received greater attention is related to the increasing foreign capital, especially in 2023. 

This is what gives optimism to Indonesia. The Governor of Bank Indonesia also stated that Indonesia's investment prospects are expected to increase rapidly this year.  The emergence of foreign capital in the Indonesian market makes this a sustainable opportunity. 

However, BI's continued decision could be more questionable. This is because, following the improvement in business prospects and the continuation of national strategic projects.

Bank Indonesia is even said to have lowered its economic growth projections. This is a questionable matter, but Bank Indonesia's Governor said this was for the best.

After Chinese New Year, the Rupiah is also predicted to strengthen

At the end of last week, Bank Indonesia also strengthened sharply by 0.58% against the US dollar. This is a positive sentiment for the Indonesian economy. However, BI noted that this would not make Bank Indonesia quick in making policy changes to the Rupiah currency.

Even BI will continue to make efforts so that the Rupiah can still strengthen after the Lunar New Year. And this is also what some economists believe, who say that the prospects for the Rupiah to gain momentum after the Lunar New Year are tremendous. Its value will continue to increase during this week.

The exchange rate strengthened, and Indonesia's economy is also believed to grow. This is the economic headline in the Indonesian market this week. Apart from that, Bank Indonesia also said that the projected economic growth would be reduced even though investor interest in the national market is increasing.