Indonesia’s central bank, Bank Indonesia (BI), slashed its benchmark 7-day reverse repo rate by 25bps to 3.50% at its February monetary policy meeting held this Thursday, as widely expected.
Governor Warjiyo said that global economic recovery is seen improving with vaccination started in many countries.
Additional comments
BI cuts deposit facility rate by 25 bps to 2.75%.
BI cuts lending facility rate by 25 bps to 4.25%.
Mass vaccination will support economic recovery momentum.
Q4 GDP below expectation, but economy continues to recover.
Revises down 2021 GDP outlook to +4.3% to +5.3%, vs +4.8% to +5.8% range previously.
2020 balance of payments seen reporting a surplus.
Keeps 2021 current account deficit estimate at 1% to 2% of GDP.
Rupiah fundamentally undervalued, has room to strengthen.
2021 inflation YoY seen within 2%-4% target range.
Reduction of lending rates has so far been limited.
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