BANK INDONESIA DELIVERS STRONG MESSAGE WITH RATE HIKE

JAKARTA - Bank Indonesia (BI) has delivered an upside surprise, raising rates by 50 basis points to 6.50%. Economists were expecting +25bps. BI also tightened loan-to-value ratio for some houses and apartments, effective from September, and banks have been banned from financing down payments for property (so prospective buyers must find other ways to finance a deposit). ANZ Bank says the aggressive stance of BI and its hawkish tone signal that the tightening cycle may extend beyond original forecasts.