Monthly policy meeting of the Bank Indonesia (BI) will be held on 18 June. BI is expected to keep the BI rate at 7.50%, the BI overnight deposit facility (FASBI) rate at 5.75%, and the BI overnight lending facility (repo) rate at 8.00%, expects Standard Chartered.
Rate cut would increase pressure on the Indonesian rupiah (IDR) and on import inflation, outweighing the benefits of a cut for real GDP growth, therefore, no rate cut is expected from the central bank this year. Standard Chartered estimates, BI will hike the BI rate by 25bps to 7.75% in September to defend the IDR from the risk of capital outflows due to the US Fed rate hikes that should start in September.
