By Mohd Iswandi Kasan Anuar
JAKARTA, Aug 21 (Bernama) — Maybank Investment Bank Bhd (Maybank IB) expects Bank Indonesia (BI) to cut its benchmark interest rate by a further 50 basis points to 4.5 per cent by the end of 2025, and to 4.0 per cent in 2026, amid improving support for the rupiah.
The projection was made in a research note released Thursday, in which the bank said the softer greenback would give the central bank more room to ease monetary policy.
“Timing-wise, BI will continue its playbook of assessing foreign exchange market conditions in the immediate lead-up to each policy meeting, to determine its monetary policy decisions,” the note said.
It stated that BI would likely focus more on improving the transmission of rate cuts to lending rates by supporting market liquidity.
BI cut its benchmark rate by 25 basis points (bps) on Wednesday, bringing it to 5.0 per cent, the fourth reduction this year, in line with Maybank IB’s earlier non-consensus forecast.
The central bank has lowered its policy rate by a total of 100 bps so far this year.
BI Governor Perry Warjiyo said the move was consistent with the stability of the rupiah, the inflation outlook, and the need to bolster economic growth.
According to Maybank IB, BI expects headline inflation to remain within its 2025 target range of 1.5 to 3.5 per cent with July inflation at 2.4 per cent.
On growth, the central bank projects the economy to expand by “around 5.1 per cent or higher” this year, supported by stronger exports, a pickup in government spending, and investment activity.
BI also expects the rupiah to remain “stable with a tendency to strengthen”, backed by its currency stabilisation measures and sustained foreign capital inflows.
The rupiah has appreciated 1.3 per cent against the US dollar since the end of July, while foreign exchange reserves stood at US$152 billion at the end of July.
— BERNAMA
BERNAMA provides up-to-date authentic and comprehensive news and information which are disseminated via BERNAMA Wires; www.bernama.com; BERNAMA TV on Astro 502, unifi TV 631 and MYTV 121 channels and BERNAMA Radio on FM93.9 (Klang Valley), FM107.5 (Johor Bahru), FM107.9 (Kota Kinabalu) and FM100.9 (Kuching) frequencies.
Follow us on social media :
Facebook : @bernamaofficial, @bernamatv, @bernamaradio
Twitter : @bernama.com, @BernamaTV, @bernamaradio
Instagram : @bernamaofficial, @bernamatvofficial, @bernamaradioofficial
TikTok : @bernamaofficial
