(Reuters) – Indonesia’s central bank governor Perry Warjiyo said on Friday 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% four months ago, but now is approaching 5.5%, BI’s own forecast.
“After we aggressively responded through interest rates, the gap between consensus forecast and our forecast is narrowing,” he said, reiterating the need for “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 2%-4% in the first half of 2023 and lower the headline inflation to within target by the second half next year.
Indonesia’s annual headline inflation in November eased to 5.42% from 5.71% in October.
(Reporting by Fransiska Nangoy, Stefanno Sulaiman; Editing by Ed Davies, Kanupriya Kapoor)