Following the Eid al-Fitr celebrations, headline inflation in Indonesia decreased to 2.84% (y.o.y) in May 2024, down from 3.00% (y.o.y) in April 2024, remaining within Bank Indonesia’s target range due to reduced post-Eid consumer demand and stable food prices from the ongoing harvest season.  Meanwhile, Rupiah depreciated by 2.79% (m.t.m) between mid-May and mid-June, reaching its lowest level since April 2020, primarily due to the strengthening US dollar. Despite this, the rising foreign exchange reserves in May 2024 provides a buffer against currency pressures. BI’s triple intervention strategy is expected to help managed Rupiah’s volatility. We view that BI should hold its policy rate at 6.25% .

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