Bank Indonesia to keep rates unchanged in April

Bank Indonesia (BI) will hold its policy meeting on 14 April. Analysts expect BI to hold the BI rate at 7.50%, the BI overnight deposit facility (FASBI) rate at 5.50%, and the BI overnight lending facility (repo) rate at 8.00% in April. 

Although BI has room to cut the BI rate further - as inflation is likely to remain benign and the current account deficit is set to improve this year - recent pressure on the Indonesian rupiah (IDR) may prevent it from cutting in April. 

"We still expect BI to cut the BI rate by 25bps to 7.25% in Q2-2015 once the IDR has stabilised. Assuming the US Fed hikes interest rates in September, we forecast that BI will hike the BI rate by 25bps each in both September and October, to 7.75% by end-2015", notes Standard Chartered in a report on Friday.