VIEW: Goldmans Expects First BI Cut In Late Q2 Depending On IDR

Bank Indonesia (BI) left its policy rate at 6% as was widely expected including by Goldman Sachs. The decision not to change rates was driven by its focus on FX stability and keeping inflation within the band, which it expects to achieve throughout 2024.

• Goldman Sachs hasn’t changed its forecast of rates unchanged through Q1 2024 and the first easing in late Q2 assuming “dollar pressures ease and inflation remains well-behaved in coming months”.
• “When asked whether BI had room to cut rates, the governor stated that BI would be patient, with the decision to ease depending on whether IDR could strengthen more, as well as growth and inflation developments.”
• “Robust consumption and public investment growth alongside a positive election spending impulse are expected to offset weak export growth in 2024, keeping GDP growth in a 4.7%-5.5% forecast range (GSe: 5.0%).”