Bank Indonesia Narrowly Expected to Hold Interest Rates Amid Market Turmoil
Economists predict Bank Indonesia will hold interest rates steady on Wednesday despite rupiah pressure and recent market volatility. Read the latest.
POLICY WIRE — Bengaluru, India — Indonesia’s central bank is anticipated to keep its benchmark interest rates untouched on Wednesday. A slim majority of economists surveyed in a recent poll indicate that the rupiah’s recent depreciation will likely fail to sway the upcoming monetary policy outcome.
The local currency has dropped roughly 8% throughout the year and recently slipped by nearly 1% following warnings that Indonesian equities might face exclusion from major global indexes. Alongside this currency slide, the Jakarta composite experienced a 5% decline.
According to a survey of 29 economists, Bank Indonesia is broadly projected to maintain its benchmark seven-day reverse repurchase rate at 5.75% on October 21. Furthermore, analysts expect the overnight deposit facility rate and the lending facility rate to stay anchored at 4.75% and 6.50%, respectively.
Market turbulence and downward pressure on the rupiah arrive while domestic inflation remains comfortably contained within the official target range. Analysts note that these economic conditions provide sufficient room for policymakers to pause further adjustments.
Looking further ahead into the remainder of the year, over 60% of surveyed economists—specifically 17 out of 27—anticipate that Bank Indonesia will maintain its current rates. Meanwhile, nine experts project one or more rate cuts, and a single analyst forecasts a 25-basis-point increase.
Reporting by Policy-Wire (PW)
