Bank Indonesia likely to cut the BI rate to 7.25% in Q1: Standard Chartered

Quotes from Standard Chartered:

-Given the recent BI rate cut and global factors, we revise our BI rate forecast to 7.75% at end-2015 (from 8.25%) and 7.75% at end-2016 (from 8.25%).

-We expect the central bank to cut the BI rate by a further 25bps to 7.25 % in March, as inflation will likely continue to slow in Q1-2015 and in April owing to the harvest season.

-We expect BI to stop cutting rates in Q2, as the C/A deficit tends to widen seasonally owing to income repatriation by foreign investors.

-We expect BI rate hikes of 25bps in September (to 7.50%) and 25bps in October (to 7.75%) in order to defend the Indonesian rupiah (IDR) from the risk of capital outflows triggered by US rate hikes.