Mon, Nov 18, 2019 – 3:30 PM
[JAKARTA] Indonesia’s central bank is expected to stand pat on Thursday to assess the effects of monetary loosening after cutting interest rates four times since July, a Reuters poll showed on Monday.
Bank Indonesia (BI) has cut its benchmark seven-day reverse repurchase rate by a total of 100 basis points (bps) in back-to-back meetings as “pre-emptive measures” to avoid a sharp downturn amid a global economic slowdown.
Twenty of 24 analysts in the poll predicted BI would keep the key rate unchanged this week at 5.00 per cent, while four forecast another 25 bp cut to bolster growth, which slid to the weakest in more than two years in the third quarter.
Consultancy Capital Economics said BI’s decision this week was “likely to be a close call”.
“Admittedly, there are a couple of good reasons why the central bank could still decide to cut,” it said, citing its own model that suggested an even weaker economy than presented by the Indonesian government.
“On balance, however, we think the central bank will want to take some time to evaluate the impact of the recent rate cuts.”
South-east Asia’s largest economy grew 5.02 per cent in the third quarter, with growth in household consumption – accounting for more than half of GDP (gross domestic product) – easing slightly. Private consumption, investment and public spending weakened, while exports were flat and imports…