Bank Indonesia (BI) will hold its policy meeting on Tuesday, 19 May. The BI rate is expected to cut by 25bps to 7.25% on the back of a narrowing C/A deficit in Q1-2015 and manageable inflation, accroding to Standard Chartered.
BI projects a narrowing of the C/A deficit to 1.6% of nominal GDP in Q1 (from 2.8% in Q4-2014), and expects inflation to fall within the BI target range of 4-6% by the year-end.
BI has recently been under pressure from the government to cut the BI rate to spur real GDP growth, which was below consensus in Q1 at 4.7% y/y.
BI is expexcted to keep the overnight deposit facility (FASBI) rate unchanged at 5.50%.
