BENGALURU- Indonesia’s central bank will only raise rates from record lows in the third quarter, several months after a widely-expected US Federal Reserve rate rise this week, a Reuters poll found.
Price rises in Southeast Asia’s largest economy so far have stayed benign. But Russia’s invasion of Ukraine has triggered a spike in global energy and food prices that will make it harder for Bank Indonesia to contain inflation.
Economists in the March 7-14 Reuters poll nevertheless kept their rate predictions largely unchanged from last month’s poll.
With economic growth yet to return to pre-pandemic levels, BI will hold its benchmark seven-day reverse repurchase rate IDCBRR=ECI unchanged at a record low of 3.50 percent at its March 17 meeting, all 20 economists polled said.
Over one-third of respondents (seven of 20) expected a hike as soon as the next quarter, but the median forecast predicted a 25 basis point hike to 3.75 percent in July-September.
“Policymakers are expected to monitor geopolitical risks on one hand, and speed, as well as the scale of US Fed policy hikes on the other,” Radhika Rao, senior economist at DBS, said.
