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Bank Indonesia: Back-to-back cut – ANZ

ANZ analysts note that Bank Indonesia (BI) has cut its 7-day reverse repo rate by 25bp to 5.50% today, marking the second straight month it lowered its policy rate.

Key Quotes

“The decision reflects BI’s desire to support economic growth pre-emptively, and the governor has signalled that the central bank will maintain an accommodative policy stance.”

“The combination of sluggish growth, benign inflation, a more synchronised global central bank easing cycle and the IDR’s stability today despite the rate cut suggests BI has more scope to cut its policy rate.”

“We are now pencilling in a more aggressive easing cycle and expect BI to lower its policy rate by 50bps to 5.00% by end-2019 (as opposed to our earlier forecast of 5.25% by Q1 2020).”

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