* reuters://realtime/verb=Open/url=cpurl%3A%2F%2Fapps.cp.%2FApps%2Fcb-polls%3FRIC%3DIDCBRR%253DECI
poll data
* All 34 economists predicted no hike on June 22
BENGALURU, June 20 (Reuters) – Bank Indonesia (BI) will
keep its key interest rate unchanged at 5.75% for a fifth
consecutive meeting on Thursday and for the rest of the year, as
inflation eased in May and was expected to decline further, a
Reuters poll of economists found.
After peaking around 6% in September, inflation gradually
eased to reach the upper end of BI’s 2-4% target range last
month, suggesting BI can wait and watch, even as policymakers in
the U.S. and Europe are likely to continue tightening policy.
All 34 economists in the June 14-19 Reuters poll expected
the central bank to hold its benchmark seven-day reverse
repurchase rate at the conclusion of its June 21-22
meeting.
Nearly two-thirds of respondents, 15 of 23, said the key
policy rate would remain at that level for the rest of 2023,
with eight economists expecting a rate cut this year.
“Bank Indonesia was one of the first central banks in the
region to pause its tightening cycle earlier this year. We
believe BI will carry out an extended pause to shore up support
for the Indonesian rupiah,” said Nicholas Mapa, senior economist
at ING.
Mapa added BI would “only consider cutting policy rates
should global central banks opt to ease monetary policy.”
Similar to its regional peers, BI was expected to leave
rates where they are for the remainder of the year as rate cuts
would lead to a weaker currency and higher imported inflation.
The Indonesian rupiah, one of the best-performing
Asian currencies, is up over 4% against the dollar this year.
“While the central bank’s next rate move is likely to be a
cut, the timing of an easing pivot will depend on external
conditions, with clear signs that the U.S. Fed is at least on a
prolonged pause a pre-requisite, in our view,” said Khoon Goh,
head of Asia research at ANZ.
“Our base call is for BI’s first cut to materialise in 2024;
robust consumer sentiment and flush liquidity conditions in the
banking system also suggest no urgency for a quick pivot.”
Median forecasts showed a 25-basis-point rate cut to 5.50%
in the first quarter of 2024, a slight downgrade from the
50-basis-point cut expected in a May poll.
(Reporting by Anant Chandak; Polling by Veronica Khongwir and
Madhumita Gokhale; Editing by Hari Kishan, Ross Finley and
Sharon Singleton)
