USD/IDR: Rupiah strengthens despite Bank Indonesia’s rate cut

At its July monetary policy meeting on Thursday, Indonesia’s central bank, Bank Indonesia (BI), slashed its 7-day reverse repo rate by 25bps to 5.75%, as widely expected.

The central bank Governor noted that several central banks have pursued dovish monetary policies, including the Fed.

Additional Comments:

Q2 GDP growth seen at same pace with Q1.

2019 economic growth seen at below midpoint of 5.0-5.4% outlook.

Efforts to support domestic demand needed to mitigate falling exports.

To work with other authorities to lift economic growth.

2019 c/a deficit seen at 2.5%-3% of GDP, below 2018's.

Sees y/y inflation at end-2019 below midpoint of 2.5-4.5% target range.

To pursue accommodative macroprudential policy to support lending growth.