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Economists predict BI to cut repo rate 25 bps this year
Bank Indonesia (BI) could reduce its repo rate by 25 basis points (bps) this year due to low inflation in line with the central bank’s plan to stimulate a sluggish credit market, economists have said.
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Get stronger – A worker piles rupiah banknotes at a Bank Mandiri cash center in Jakarta on Sept.27. (Antara/Rosa Panggabean)
B
ank Indonesia (BI) could reduce its repo rate by 25 basis points (bps) this year due to low inflation in line with the central bank’s plan to stimulate a sluggish credit market, economists have said.
“BI itself has already indicated that monetary easing is possible. Not only because of low inflation and a manageable current account but also because BI wants to spur slow credit,” Bahana TCW chief economist and director of investment relations Budi Hikmat told The Jakarta Post.
Samuel Asset Management chief economist Lana Soelistianingsih also forecast that BI would slash its rate by 25 bps to 4.75 percent considering the low inflation rate and strong rupiah.
“The rupiah tends to grow stronger with the potential for significant repatriation funds [from the tax amnesty],” she said.
However, she said policy easing was still needed to compensate for the weak domestic economy amid state budget cuts.
BI cut its seven-day reverse repo rate to 5 percent from 5.25 percent in September. It has also cut the deposit facility rate to 4.25 percent from 4.5 percent and its lending facility rate to 5.75 percent from a previous 6 percent. (win/dan)
