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MNI Bank Indonesia Preview – September 2024: First Watch The Fed

We don't expect BI to cut rates in September but will likely watch what the Fed does first.

Asia Bank - PreviewHomepageBank of Indonesia - PreviewEM Central Bank ReportsEM Central Bank PreviewEmerging Market News

EXECUTIVE SUMMARY:

  • Bank Indonesia (BI) meets on September 18 and will announce its decision hours before the Fed. With meetings every month, BI has the flexibility to watch and wait and is unlikely to feel the pressure to cut rates on the day the Fed is widely expected to begin easing, especially given uncertainties. 6/35 on Bloomberg expect a 25bp cut.
  • BI should be happy with the progress of rupiah strengthening but FX stability is likely to remain its focus. USDIDR is now lower than it was when BI hiked in April and October and the IDR NEER higher than in April. Its reliance on money market deepening tools to support the currency is likely to continue unwinding ahead of rate cuts.
  • In August, Governor Warjiyo said that BI’s focus in Q3 is on FX stability and that it needs more certainty on the outlook before it eases, which he reiterated is likely to be in Q4. The swearing in of Indonesia's new President Prabowo and US elections which take place after BI's October 16 meeting may push the first cut out to November.

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BI Preview - September 2024.pdf

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EXECUTIVE SUMMARY:

  • Bank Indonesia (BI) meets on September 18 and will announce its decision hours before the Fed. With meetings every month, BI has the flexibility to watch and wait and is unlikely to feel the pressure to cut rates on the day the Fed is widely expected to begin easing, especially given uncertainties. 6/35 on Bloomberg expect a 25bp cut.
  • BI should be happy with the progress of rupiah strengthening but FX stability is likely to remain its focus. USDIDR is now lower than it was when BI hiked in April and October and the IDR NEER higher than in April. Its reliance on money market deepening tools to support the currency is likely to continue unwinding ahead of rate cuts.
  • In August, Governor Warjiyo said that BI’s focus in Q3 is on FX stability and that it needs more certainty on the outlook before it eases, which he reiterated is likely to be in Q4. The swearing in of Indonesia's new President Prabowo and US elections which take place after BI's October 16 meeting may push the first cut out to November.

Click to view full preview:

BI Preview - September 2024.pdf