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Citing the need to maintain external stability, Bank Indonesia (BI) kept its policy rate unchanged today, per ANZ Bank. USD/IDR is trading at 15,726.00.

Key quotes

“Today’s status quo on rates was contrary to street expectations which forecasted a third consecutive cut.”

“The growth picture painted by the central bank was expectedly dire, with the 2020 GDP forecast reduced to 2.3%.” 

“The BI forecast a reduction in the current account deficit to even 1.5% of GDP in Q1 2020. This extent of reduction, combined with dollar bond sales, bodes well for IDR stability which in turn, should reopen the door for further rate cuts.”

“We are retaining our forecast for a 25bp rate cut in Q2.”