Bank Indonesia (BI) will hold its monthly policy meeting on 18 June. BI is expected to keep the BI rate at 7.50%, the BI overnight deposit facility (FASBI) rate at 5.75%, and the BI overnight lending facility (repo) rate at 8.00%.
Standard Chartered notes:
- We recently revised our BI rate forecasts. We no longer expect the central bank to cut the BI rate this year, as cutting would increase pressure on the Indonesian rupiah (IDR) and on import inflation, outweighing the benefits of a cut for real GDP growth.
- We forecast that BI will hike the BI rate by 25bps to 7.75% in September to defend the IDR from the risk of capital outflows due to the US Fed rate hikes that should start in September.
