Bank Indonesia in surprise hike of repo rates

November 15, 2018

JAKARTA - In a surprise decision, Bank Indonesia (BI) today hiked its 7-day reverse repo rate by 25bps to 6.00% in a move reflecting BI's desire to reduce the current account deficit and improve the attractiveness of domestic financial assets.

"The policy messaging continues to signal the central bank's focus on supporting the rupiah," ANZ Bank commented in a research note. "With the broader global environment still highly uncertain, today's hike is unlikely to be BI's last."

ANZ believes the timing of BI's next move will be dependent on the financial market backdrop - "if sentiment sours in the coming weeks, the next hike could come as soon as its meeting in December".