Waluyo said Indonesia's central bank will only adjust its monetary policy at the last policy meeting of 2017 provided there occur sudden inflationary shocks or a suddenly weakening rupiah exchange rate. He added, however, that Indonesian inflation is currently low at 3.3 percent year-on-year (y/y), while the rupiah is stable at around 13,500 per US dollar.

Over the past two years Indonesia's benchmark interest rate was cut from 7.50 percent to 4.25 percent. But despite such significant monetary easing, domestic consumption and loan growth have remained subdued in Indonesia, Southeast Asia's largest economy. Bleak household consumption and bleak investment are key reasons why the macroeconomic growth rate of Indonesia has been stagnant at around 5 percent (y/y) since 2014.

Former Indonesian Finance Minister Chatib Basri does not see any room for further rate cuts in Indonesia on the short term. Considering another looming Fed Funds Rate hike, the cutting of its balance sheet (which grew from about USD $1 trillion to $4.5 trillion in only five years), and US President Donald Trump's tax reform program, chances are bigger that Bank Indonesia needs to raise its key rate. However, next year there could be room again for monetary easing in Indonesia, Basri added.

Basri also said that aggressive monetary easing has had little impact on loan growth and household consumption in Indonesia. The only solution to overcome bleak demand would be fiscal expansion. But, problematically, due to low tax revenue realization, the Indonesian government has few room for fiscal expansion.