Indonesia set for more rate cuts on growth view: Analysts
FILE PHOTO: Indonesia's Central Bank Governor Perry Warjiyo speaks during a press conference at Bank Indonesia's headquarters in Jakarta, Indonesia, January 15, 2025. REUTERS/Willy Kurniawan/File Photo
JAKARTA: An improving market sentiment will pave the way for Indonesia's central bank to better balance its pro-growth stance with ensuring stability in the financial markets, according to analysts.
Bank Indonesia will not hesitate to stabilise the rupiah through intervention amid economic uncertainty, Governor Perry Warjiyo (pic) said after reducing the BI-Rate by 25 basis points on Wednesday. The central bank also lowered its 2025 gross domestic product growth forecast to a range of 4.6% to 5.4%.
There's room for the central bank to further ease policy as the rupiah regains footing amid a weaker dollar, cooling trade tensions and waning fiscal concerns. Foreign flows are also returning to local stocks and bonds.
"BI could cut the policy rate by another 75 basis points this year as the rupiah stabilises,' though a potential delay in Federal Reserve fund rate cut may slow Indonesia's pace of easing, Goldman Sachs Group Inc analysts Rina Jio and Danny Suwanapruti wrote in a note. - Bloomberg
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