- US consumer demand remains strong. However, the loosening labour market, the threat of re-escalating energy inflation, and tighter financing conditions mean that a drop in consumption level may be inevitable.
- A slowing US economy would be a net loss on Indonesia’s book as reduced external demand would hit the domestic real sector while the prospect of capital inflow appears to be limited considering the “no cuts” outlook in 2023.
- Bank Indonesia may continue to use its dual tools of policy rate spread to protect the Rupiah’s value and accommodative macroprudential policies to provide support for the domestic real economy.
