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Bank Indonesia unlikely to change monetary policy in near-term, says DBS Bank

Bank Indonesia (BI) is expected not to change the benchmark interest rate in the near-term; rather continue to watch financial market developments very closely in the coming months. In the meantime, the central bank can be expected to continue to build up its foreign reserves, which further allows it to dampen the impact of inflows and outflows, in a bid to manage the rupiah moves.

Bank Indonesia (BI) kept interest rates unchanged on Thursday. While its policy stance is now said to be biased towards neutral (rather than accommodative), the tone of the policy statement was a tad more dovish as compared to that in March.

There was less of an emphasis on the upward trend in inflation, although the central bank did warn on the seasonal pressures ahead of the Ramadan. On the GDP growth outlook, BI indicated that consolidation in the private sector has been sustained, and likely to have remained a drag on growth momentum in 1Q17.

Encouragingly, the BI was a little more optimistic on investment growth this time around. Non-construction investment growth is seen to have picked up, and this much should have been visible from the strong import growth recorded in March.

"The central bank has been tolerant of gradual trade-weighted currency appreciation. Raising the key 7-day reverse repo rate later this year may be necessary if the Federal Reserve sticks with its plan to normalize interest rates in 2017 and 2018," DBS Group Research commented in its latest report.

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October 24 09:00 UTC Released

EZMarkit Comp Flash PMI

Actual

55.9 bln EUR

Forecast

56.5 bln EUR

Previous

56.7 bln EUR

October 24 09:00 UTC Released

EZMarkit Serv Flash PMI

Actual

54.9 bln EUR

Forecast

55.6 bln EUR

Previous

55.8 bln EUR

October 24 12:55 UTC 222222m

USRedbook MM

Actual

Forecast

Previous

-1.4 %

October 24 12:55 UTC 222222m

USRedbook YY

Actual

Forecast

Previous

3.6 %

October 24 12:55 UTC 222222m

USRedbook MM

Actual

Forecast

Previous

-1.4 %

October 24 12:55 UTC 222222m

USRedbook YY

Actual

Forecast

Previous

3.6 %

October 24 13:00 UTC 227227m

MXFlash Trd Bal Non-EU*

Actual

Forecast

Previous

-0.7 Bln EUR

October 24 13:00 UTC 227227m

MX1st Half-Mth Infl YY*

Actual

Forecast

Previous

1.00 %

October 24 13:00 UTC 227227m

USIGAE Econ Activity MM

Actual

Forecast

Previous

-0.7 %

October 24 13:00 UTC 227227m

MXIGAE Econ Activity YY

Actual

Forecast

1.50 %

Previous

1.00 %

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