BENGALURU – Bank Indonesia will hold interest rates steady on Wednesday to support the under-pressure rupiah, despite growing concerns of slowing economic growth driven by US-led trade policies, a Reuters poll of economists found.
With the rupiah down more than 4 percent this year, and hovering near a record low, the central bank will probably remain cautious about rushing into a cut.
The currency had initially come under pressure from the impact of President Prabowo Subianto’s fiscal plans, but more recently also by a 32 percent tariff imposed on all Indonesian goods imported by the United States, currently paused for 90 days.
Southeast Asia’s largest economy has grown steadily at around 5 percent for years, but US tariffs could slow it by 0.3 percent to 0.5 percent, Finance Minister Sri MulyaniIndrawati said recently.
Indonesia is currently negotiating a trade deal with Washington.
All but two of the 26 economists in the April 14–21 Reuters poll predicted the central bank would keep its benchmark seven-day reverse repurchase rate IDCBRR=ECI at 5.75 percent on Wednesday.
The overnight deposit and lending facility rates are also expected to remain at 5.00 percent and 6.50 percent, respectively.
“With USD/IDR surging visibly after the Eid holiday, we doubt Bank Indonesia will be able to resume rate cuts in April,” said Brian Tan, senior regional economist at Barclays.
