BI Preview: Forecasts from five major banks, a pause, future trajectory uncertain

Bank Indonesia (BI) will hold its monthly governor board meeting on Thursday, February 16. Here you can find the expectations as forecast by the economists and researchers of five major banks regarding the upcoming central bank's rate decision.  

BI is expected to keep rates steady at 5.75%. At the last policy meeting on January 19, the central bank hiked rates by 25 basis points (bps) to 5.75%.

SocGen

“We believe that BI will opt for a pause in February and keep its policy (7-day Reverse Repo) rate unchanged at 5.75%. We would like to believe that it has reached the end of its rate-hike cycle and could choose to take a long pause before probably opting for a rate cut by end-2023.”

Standard Chartered

“We expect BI to keep the 7-day reverse repo rate unchanged at 5.75% to maintain an attractive interest rate spread against US rates, which should support IDR stability. We expect BI to stay cautious on global uncertainty, including US interest rate hikes and global financial market stability; it may continue to signal that policy will be data-dependent. We maintain our call for BI to keep the policy rate unchanged this year, with rate cuts starting only next year.” 

ING

“BI could still opt to hike by 25 bps given renewed hawkish signals from the Fed while also ensuring core inflation heads much lower before pausing.”

ANZ

“We expect BI to keep the policy rate on hold at 5.75%. Although the IDR, likeother regional currencies, has come under some downward pressure after a strong US jobs report, it is still stronger than it was at the start of 2023. Unless there are clear signs that suggest the US Fed’s terminal policy rate is likely to surpass BI’s expectation of 5.25%, we maintain that the latter’s rate-hike cycle has ended.”

TDS

“BI is increasingly comfortable with the inflation trajectory and likely feels less compelled to raise rates further. BI is also likely comfortable with IDR levels.”