Indonesia central bank may retain policy rates until market recovers

Several analysts expect that Indonesia’s central bank is likely to retain its policy rates on Tuesday, as its currency and capital markets strive to gain momentum amid disruptions brought by the coronavirus pandemic.

Fifteen out of 28 analysts who participated in the poll predicted that the bank would retain its 4.50% repurchase rate IDCBRR=ECI. Eleven analysts speculated a 25-basis point reduction while two predicted a sharper 50-bp cut.

Indonesia’s central bank had cut its benchmark rate for the second time this year to combat the economic threats posed by the pandemic. Currently, six reductions were made in the current easing cycle that started back in 2019, bringing the basis points to a total of 150.

Moreover, the central bank also trimmed its 2020 GDP prediction as the Southeast Asia’s biggest economy reverses due to slump in demand. The lack of demand was mainly from trade disputes and other economic disruptions brought by the novel coronavirus.