Bank Indonesia Likely to Retain Hawkish Bias

Dow Jones
08/19

0905 GMT - Bank Indonesia's current pause looks like a tactical one rather than the end of its tightening cycle, with one final 25bp rate hike to 6.00% expected in 4Q, RHB economist Wong Xian Yong says in a note. The expected increase has been pushed back from 3Q as the rupiah stabilizes, inflation eases and external tightening pressures moderate, he says. However, BI is expected to remain focused on rupiah stability, inflation and economic growth, he reckons. Renewed rupiah weakness and higher food prices because of El Nino could bring forward the rate increase, while softer growth and stable inflation could allow BI to stay on hold longer, he adds.

 

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