LPEM COMMENTARY BI BOARD OF GOVERNORS’ MEETING FEBRUARY 2016

After cutting its policy rates by 25 basis points to 7.25% last month, we expect Bank Indonesia to cut the benchmark rate by another 25bps in the upcoming meeting. This possible rate cut is attributable to more controllable inflation outlook in 2016 and strengthening exchange rate in recent months. Weakening global growth outlook and downward trend of interest rates globally will also ease pressures on Rupiah. These also strengthen the case for more accommodative monetary policy.

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