Whether or not Bank Indonesia (BI) will lower its interest rates in December remains anyone's guess at this point. Vice President Kalla continues to insist that BI should lower rates to help boost GDP growth. But BI's position on this front has been made clear in its November policy statement. There is a need to balance between downside risks to growth and potential volatility in financial markets due to the US Fed rate lift-off. 

In any case, given that underlying sentiment (among consumers and business owners) remains tepid, 25-50bps rate cuts may not help to speed up investment growth by much. We probably need to see at least 100-150bps rate cuts before we see a significant increase in loan demand for new investments. But if the Fed were to raise its interest rate by as much as 100bps in 2016, the narrower rate differential may put renewed pressure on the rupiah. This could be a problem. Managing volatility of the rupiah is presumably more important than a token rate cut at this juncture. 

Additionally, faster GDP growth in the short-term may only be achieved by a more effective fiscal policy, especially with regards to the pace of capital expenditure (capex). Up until 3Q15, less than 30% of this year's capex budget has been spent, which proved to be a main drag on overall GDP growth.