17 Feb 2015
Bank of Indonesia joins the ‘surprise’ wagon – BBH
FXStreet (Barcelona) - The Brown Brothers Team mention that overnight the biggest surprise witnessed in EM markets was the unanticipated rate cut in Indonesia, with BI lowering rates by 25bp to 7.5%.
Key Quotes
“Biggest news in the EM space overnight was the surprise cut by Indonesia’s central bank. The rate was lowered by 25 bp to 7.5%, in contrast with unanimous calls for no change by market participants.”
“Recall that Indonesia hike rates last November in an unscheduled meeting after fuel subsidies were cut."
"Growth has slowed, but at 5.0%, it is still rising at relative solid pace. And despite the benefits of lower energy prices at the pump, inflation is still running at round 7.0% y/y.”
“It seems as if the bank is trying to use the window of opportunity before the Fed starts hiking rates.”
“We see the logic of that, but with the rupiah trading back to levels not seen since the Asian financial crisis in the late 90s and oil prices increasing, the move seems a bit premature to us.”
Key Quotes
“Biggest news in the EM space overnight was the surprise cut by Indonesia’s central bank. The rate was lowered by 25 bp to 7.5%, in contrast with unanimous calls for no change by market participants.”
“Recall that Indonesia hike rates last November in an unscheduled meeting after fuel subsidies were cut."
"Growth has slowed, but at 5.0%, it is still rising at relative solid pace. And despite the benefits of lower energy prices at the pump, inflation is still running at round 7.0% y/y.”
“It seems as if the bank is trying to use the window of opportunity before the Fed starts hiking rates.”
“We see the logic of that, but with the rupiah trading back to levels not seen since the Asian financial crisis in the late 90s and oil prices increasing, the move seems a bit premature to us.”