Bank Indonesia likely to keep policy rate on hold in August

Indonesian central bank, Bank Indonesia, is set to meet early next week for its policy decision. According to consensus expectations, the Indonesian central bank is unlikely to change its 7-day reverse repo policy rate of 4.75 percent. The Bank Indonesia has kept the key policy rate at 4.75 percent since last October.

BI Governor Agus Martawardojo stated recently that if all indicators underpin it, there is possibility of an easing potential and that he is quite happy with inflation at around 3.9 percent year-on-year.

Whether is takes place during the next week’s meeting or thereafter, the prospect of additional easing would only be a drag on the Indonesian rupia that has been little changed against the U.S. dollar this year in a year of widespread weakness that was accompanied by outperformance by other Asian currency crosses, noted Scotiabank in a research report.

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