BI: An interest rate cut is not ruled out yet – UOB

UOB Group’s Economist Enrico Tanuwidjaja and Haris Handy give their opinion on the recent interest rate decision by the Bank Indonesia (BI).

Key Quotes

“Bank Indonesia (BI) decided to leave its benchmark rate unchanged at 4.00% at its September 2020 monetary policy meeting (MPC), which is in line with consensus forecast. Consequently, Bank Indonesia (BI) maintained the Deposit Facility rate at 3.25%, as well as the Lending Facility rate at 4.75%. BI reiterated that the decision is consistent with the need to maintain exchange rate stability, with inflation expected to stay low, yet conducive to support the economic recovery.”

“BI’s macroprudential policy stance will remain accommodative, in line with its policy mix and steady coordination with the government’s policy supporting the process and progress of economic recovery and to mitigating the risk in the financial sector due to the COVID-19 outbreak.”

We keep the view that BI may cut the BI 7 Day Reverse Repo rate by another 25bps in Q4 to 3.75% as growth recovery trajectory may be slower than expected. However, this is likely to be the last rate cut for 2020, bringing the BI 7 Day Reverse Repo rate to a record low level. BI forecast GDP growth at 4.8% in 2021 while stating that current account deficit may narrow below 1.5% of GDP this year. Inflation is expected to remain within the 2-4% target for this year and next year. Going forward, we still expect BI to deploy other easing measures and may implement more macroprudential measures to ensure ample liquidity.”

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.

Feed news

Latest Forex News

Latest Forex News

Editors’ Picks

EUR/USD edges above 1.18 amid mixed US data, slim stimulus hopes

EUR/USD is trading above 1.30 after US Durable Goods Orders beat expectations but Consumer Confidence missed estimates. Hopes for a US stimulus deal are slim with a week left until the elections.


GBP/USD stabilizes above 1.30 amid Brexit and covid uncertainty

GBP/USD is hovering above the round 1.30 levels as rising UK COVID-19 cases, uncertainty about Brexit, and PM Johnson's political problems weigh on sterling. US data has been mixed.


XAU/USD pares early gains, turns flat near $1,900

For the third straight trading day on Tuesday, the XAU/USD pair is moving sideways above $1,900 as participants wait for the next significant catalyst. After climbing to a daily high of $1,910 earlier in the day, the pair lost its traction and was last seen trading virtually unchanged on the day at $1,902.

Gold News

Bitcoin breaks new yearly highs; the road to $15,000 is clear

Bitcoin breaks new yearly highs and hits $13,464. The road to $15,000 is clear as there are no major resistance levels above the current price.

Read more

WTI trims losses and moves near $39.00/bbl ahead of API

Following two consecutive daily pullbacks, prices of the West Texas Intermediate regain some buying interest and reach the $39.00 mark per barrel on turnaround Tuesday.

Oil News