Bank Indonesia likely to hold key rate
JAKARTA: Indonesia’s central bank, which has cut rates aggressively this year, is expected to hold its benchmark steady today as it assesses the impact of earlier policy easing on the sluggish economy.
Bank Indonesia (BI) has cut its key rate five times in 2016, by a total of 125 basis points, and trimmed banks’ reserve requirement ratio to aid economic growth, which last year was 4.8%, the slowest since 2009.
The central bank has switched its main policy rate from the 12-month reference rate to the 7-day reverse repurchase rate , to more directly impact the financial market and enhance the effects of its monetary easing.
Thirteen of 17 economists surveyed by Reuters said BI will leave its benchmark today. The other four forecast another 25 basis point cut.
“We think that BI will wait to see how effective these measures are in boosting growth before cutting again,” Capital Economics said in note.
The consultancy noted that BI might ease monetary policy again later, but the timing “will depend on when and how aggressively the US Fed moves to tighten interest rates”. – Reuters
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