Bank Indonesia: Back-to-back cut – ANZ

ANZ analysts note that Bank Indonesia (BI) has cut its 7-day reverse repo rate by 25bp to 5.50% today, marking the second straight month it lowered its policy rate.

Key Quotes

“The decision reflects BI’s desire to support economic growth pre-emptively, and the governor has signalled that the central bank will maintain an accommodative policy stance.”

“The combination of sluggish growth, benign inflation, a more synchronised global central bank easing cycle and the IDR’s stability today despite the rate cut suggests BI has more scope to cut its policy rate.”

“We are now pencilling in a more aggressive easing cycle and expect BI to lower its policy rate by 50bps to 5.00% by end-2019 (as opposed to our earlier forecast of 5.25% by Q1 2020).”