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MNI Bank Indonesia-Oct 2024: Flexibility To Watch The Fed

Recent rupiah depreciation, including on a trade weighted basis, may mean that BI remains on hold in October.
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EXECUTIVE SUMMARY:

  • In its September statement, BI said that FX stability and appreciation were required for there to be another opportunity to “lower the policy rate”. Thus, recent rupiah depreciation, including on a trade weighted basis, may mean that BI remains on hold in October following its surprise 25bp easing in September, although it is a close call with 10 out of 38 on Bloomberg forecasting another cut. 
  • We believe that BI won't want to risk destabilising the rupiah as USDIDR is up 1.4% since BI’s September 18 meeting and around 3.0% since September 26 peak. Also, the JP Morgan NEER is down 0.4% since that meeting. 
  • Inflation is contained within the band and growth remains robust, also BI has macroprudential tools to support the economy. But there are reasons to continue easing but also to wait until November.

FOR THE FULL PUBLICATION PLEASE USE THE FOLLOWING LINK: BI Preview - October 2024.pdf

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EXECUTIVE SUMMARY:

  • In its September statement, BI said that FX stability and appreciation were required for there to be another opportunity to “lower the policy rate”. Thus, recent rupiah depreciation, including on a trade weighted basis, may mean that BI remains on hold in October following its surprise 25bp easing in September, although it is a close call with 10 out of 38 on Bloomberg forecasting another cut. 
  • We believe that BI won't want to risk destabilising the rupiah as USDIDR is up 1.4% since BI’s September 18 meeting and around 3.0% since September 26 peak. Also, the JP Morgan NEER is down 0.4% since that meeting. 
  • Inflation is contained within the band and growth remains robust, also BI has macroprudential tools to support the economy. But there are reasons to continue easing but also to wait until November.

FOR THE FULL PUBLICATION PLEASE USE THE FOLLOWING LINK: BI Preview - October 2024.pdf