Bank Indonesia lifts interest rate again

JAKARTA - Renewed rupiah volatility has prompted Bank Indonesia (BI) to hike its 7-day reverse repo rate by 25bps to 5.50% today. In doing so, BI also reiterated that its policy stance will remain both pre-emptive and front-loaded.

On the broader economy, BI modestly lowered its 2018 GDP forecast range, presumably taking into consideration the impact of its rate hikes on growth. It also expects the current account deficit to narrow in response to the Government’s import reduction measures.

ANZ bank says its current expectation is that BI will refrain from further rate hikes. “However, much would depend on how quickly the rupiah stabilises, a complex issue in the current environment of global financial market volatility.” www.live.anz.com (ATI).