Bank Indonesia to hold rates at 5.75% for rest of 2023, cut early next year - Reuters poll
(This Sept. 18 story has been corrected to say inflation has stayed within the target range, not below, in paragraph 2 and BI was expected to keep rates up over 1.0%, not down 1.3%, in paragraph 3)
By Devayani Sathyan
BENGALURU (Reuters) — Bank Indonesia (BI) will keep its key interest rate unchanged at 5.75% on Thursday and for the rest of the year to maintain the stability of the rupiah currency, similar to most of its Asian peers, as inflation continues to ease, a Reuters poll found.
Inflation, at 3.27% in August, has stayed within the central bank's 2-4% target range over the past few months, but rising U.S. Treasury yields and concerns over an economic slowdown in China have put pressure on the rupiah.
BI was expected to keep rates on hold to support the currency, up over 1.0%
All 31 economists in a Sept. 8-18 Reuters poll expected the central bank to maintain its benchmark seven-day reverse repurchase rate at 5.75% at the conclusion of its two-day policy meeting on Sept. 21.
«Bank Indonesia would prefer to keep rates on hold while weighing global uncertainties versus domestic considerations. So while inflation is still within its own official target, I think rupiah stability will be paramount,» said Radhika Rao, senior economist at DBS.
«BI are trying to balance FX stability risks vis-a-vis domestic considerations, and at this point they would lean more towards FX stability especially because trade surpluses are narrowing.»
With the U.S. Federal Reserve expected to continue its 'higher for longer' mantra, the rupiah was predicted to weaken further or trade in a tight range, likely keeping rate cut expectations at bay for now.
Among economists who had a long-term view, forecasts were largely unchanged from an August
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