Bank Indonesia (BI) will hold its policy meeting on Tuesday, 17 March.
Standard Chartered notes its forecasts as follows:
- We expect BI to cut the BI rate and the BI overnight deposit facility (FASBI) rate by 25bps each to 5.25% and 7.25%, respectively, and to keep the BI overnight lending facility (repo) rate unchanged at 8.00%.
- We also think prospects of lower inflation (we expect inflation to slow to 3.7% in 2015 from 8.4% in 2014) will prompt it to cut the BI rate further this year.
- However, we acknowledge the risk of BI postponing further rate cuts to Q2-2015 given ongoing pressure on the Indonesian rupiah (IDR).
- The National Statistics Agency (BPS) will announce February trade data the day before the BI meeting. We expect the trade surplus to have increased to USD 0.9bn from USD 0.7bn in January.
