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Economist Enrico Tanuwidjaja and Haris Handy at UOB Group give their opinion on the latest meeting of the Bank Indonesia (BI).

Key Quotes

“Indonesia’s central bank left its benchmark rate unchanged at 4.00% at its August 2020 monetary policy meeting (MPC), which is in line with consensus forecast. Consequently, Bank Indonesia (BI) maintained the Deposit Facility rate at 3.25%, as well as the Lending Facility rate at 4.75%.”

“BI macroprudential policy stance will remain accommodative, in line with the previous policy mix as well as the national policy aimed at mitigating the risk in the financial sector due to the COVID-19 outbreak.”

We had expected a stand-pat decision from BI and are keeping our forecast of 25bps cut in Q4 2020, bringing the 7-day reverse repo rate to a lower level at 3.75%. There is still a room for rate cut as growth risks mount. Last week, the government revised down its 2020 economic growth forecast to a range of -1.1% to 0.2%.”