Following slightly higher inflation and uptick in economic activities, offset by slashed US growth outlook, Bank Indonesia should be well advised to  keep its policy rates at current  level. We still maintain a slight bias toward rate cut this Thursday, given that domestic inflationary concern is not as  apparent as upward pressure on Rupiah exchange rate, which comes from both sovereign rating upgrade and reduced probability of further Fed rate  hikes after US growth outlook is cut. Any rate cut by BI, however, can only be possible if monthly inflation after Eid Mubarak revert back to more  stable level.

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