Bank Indonesia Preview: Four major banks expectations

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Bank Indonesia (BI) holds its monthly governor board meeting on 12-13 October. The central bank is likely to keep its 7-day repo rate unchanged at 4% and as we get closer to the release time, here are the expectations forecast by the economists and researchers of four major banks. Meanwhile, USD/IDR keeps bounces off 200-day SMA, nears one week high of 14,795 flashed recently.

ANZ

“We expect BI to maintain the policy rate at 4.0% at their meeting next Tuesday. The decision to stay on hold does not imply that BI is stepping away from monetary accommodation. Rather, it is changing its composition from rate cuts to quantitative easing.”

TDS

“BI has been on hold since July and we expect a similar outcome at the meeting in October, with the 7-day reverse repo likely to be left unchanged at 4%. However, the risk to our view is skewed towards easing. The major stumbling block for BI is the IDR. We think they will want to see greater stability in the currency before cutting again. As such, we think a cut could come as early as next month.” 

Standard Chartered    

“We expect BI to keep the 7-day reverse repo rate unchanged at 4.0%, ahead of the US election in early November. Portfolio outflows reached $1.2 B in September, likely amid concerns about extended social-distancing measures affecting the economic recovery; we believe this warrants a cautious BI stance. We believe BI will continue monetary expansion through debt monetisation to support growth.”

UOB

“Lower than expected growth turnouts in H2, alongside low inflationary pressure, and should FX stability remain more entrenched, we expect a 25bps rate cut in Q4, bringing the benchmark rate to 3.75%. BI could also opt for liquidity-supporting measures and macro-prudential policies.”

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