Bank Indonesia likely to cut key interest rate by 25 bps in September

Bank Indonesia is set to meet tomorrow for its interest rate decision. According to a DBS Bank research report, the Indonesian central bank is expected to cut its key interest rate by 25 basis points.

The central bank has repeated its concern over deceleration of growth and high frequency indicators have pointed towards slower growth in the second half of 2019. Moreover, inflation has stayed benign and the Indonesian rupiah has strengthened by 1.9 percent after regional peers since the last policy meeting.

“We see that the timing of further cut(s) will depend more on Rupiah stability, as a result of the dynamics between current account deficit, which is likely to remain wide in 2H19, and capital inflows”, added DBS Bank.