Indonesia: Beginning of easing cycle - TDS

Mitul Kotecha, senior emerging markets strategist at TD Securities, notes that Bank Indonesia cut its 7-day repo by 25bp to 5.75% as expected and noted that they see more room for monetary policy adjustments.

Key Quotes

“This in our view portends to further rate cuts in line with our view that BI will cut by at least another 75bps by end Q1 20. BI's briefing was dovish, noting that they see inflation as being “low in 2019 and going forward”. BI forecasts CPI at below the mid point of its 2.5%-4.5% range.”

“BI sees GDP below the midpoint of its 5-5.4% forecast range, with Q2 GDP seen at the same pace as Q1 (5.07% y/y). We think risks are rising for GDP to come in closer to 5% this year, weighed down by weaker trade.”