November 13, 2018 / 8:04 AM / 5 months ago

POLL-Indonesia seen extending pause in a tightening cycle

* reuters://realtime/verb=Open/url=cpurl://apps.cp./Apps/cb-polls?RIC=IDCBRR%3DECI Poll data

* 17 of 19 economists see BI keeping key rate at 5.75 pct

* Some economists see Dec rate hike, after Fed moves

* Rupiah falls again after posting gains in early Nov

* Decision due on Thursday, Nov 15, around 0700 GMT

JAKARTA, Nov 13 (Reuters) - Indonesia’s central bank is likely to hold its benchmark interest rate this week, a Reuters poll showed on Tuesday, though some analysts expect December to bring this year’s sixth rate hike.

Bank Indonesia (BI) on Thursday will keep the 7-day reverse repo rate at 5.75 percent for a second straight monthly policy review, 17 of 19 analysts in the poll said.

The other two pencilled in a 25 basis point hike.

The central bank has been one of the most aggressive in Asia, raising rates 150 basis points between May and September, taking pre-emptive actions to slow capital outflows and support the fragile rupiah .

Even with the rate hikes, outflows from Indonesian financial market, due to rising U.S. interest rates and the U.S.-China trade war, had sent the rupiah to its weakest levels in 20 years.

Improving global sentiment and Indonesia’s slightly stronger than expected third quarter economic growth gave the rupiah a leg up earlier this month.

However, with the dollar strengthening in recent days, the rupiah has slipped again. Friday’s report that the current account deficit widened in the third quarter exacerbated its fall.

“This month we expect BI to keep the policy rate unchanged at 5.75 percent. However, we continue to think BI will remain hawkish as we expect the dollar to strengthen further in anticipation of the Fed hiking rates in December,” HSBC said in a note, adding that it expects BI to raise rates next month.

The last policy meeting of this year ends on Dec. 20 - just hours after the Federal Reserve announces the decision of its final 2018 policy-setting session.

In late October, Governor Perry Warjiyo said BI will recalibrate its monetary stance at this week’s meeting after months of describing it as “hawkish”. However, he said the bank’s main focus remained rupiah stability.

On Tuesday, BI’s head of monetary management Nanang Hendarsah said the central bank has allowed market forces to determine the spot exchange rate of the rupiah as it put more emphasize on deepening the new domestic non-deliverable forward market.

The rupiah’s weakness has not put significant pressure on consumer prices. The annual inflation rate accelerated in October, but at 3.16 percent it remained well within BI’s comfort range. (Polling by Nilufar Rizki and Tabita Diela in JAKARTA and Khushboo Mittal in BENGALURU; Writing by Gayatri Suroyo; Editing by Richard Borsuk)

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