Domestic Growth "Still Solid"

Activity related data since Bank Indonesia's (BI) 20 March meeting have been consistent with its assessment that the domestic economy is "still solid". Thus given recent rupiah weakness, the central bank can maintain rates at 6% for some time as the economy doesn't need the additional stimulus and a rate cut would pressure the currency further. Over a quarter of analysts expect a rate hike today but given BI signalled the next move is likely to be down, we think this unlikely.

• We don’t expect BI's economic assessment to change this month on both the domestic and international fronts. Q1 GDP is released on May 6 and if it deviates materially from the 5% trend seen over the last year, then BI may change its view of the economy in its May 22 meeting statement.
• The S&P Global manufacturing PMI rose to 54.2 from 52.7 in March and is the highest in ASEAN. The pickup in activity was driven by domestic new orders but foreign orders were weak (see latest trade update). The April PMI prints on May 2.