Further 25bp cuts from Bank Indonesia likely this year

Having surprised markets last month with a rate cut, Bank Indonesia (BI) left its key policy rate on hold on Tuesday at 7.50%.

GDP grew by just 5.0% last year, the worst performance since the 2008-09 global financial crisis. 

Capital Economics notes in a report on Tuesday:

• Looking ahead, it is unlikely to be long before BI follows up Feb's cut by loosening again. 
  
  
• Our forecast is for growth of just 5.0% this year. If growth turns out as we expect, the central bank could find itself under pressure to cut rates again. 
  
  
• We expect two further 25bp cuts this year, which would take the policy rate to 7.00%.