‘Indonesia rate move depends on timing’

Bloomberg

Indonesia’s central bank is discussing the possibility of cutting interest rates but is waiting for the right time to do so, Deputy Governor Dody Waluyo said.
Given the uncertainty in financial markets, the central bank needs to be “cautious” and a rate cut “will depend on the timing,” Waluyo said in an interview with Bloomberg
Television’s Kathleen Hays in Japan. Policy makers are monitoring the economic data closely to assess when they can move, he said.
“We are calculating from time to time the possibility to cut rates,” he said. “Hopefully we will do it later on.”
Global central banks are shifting to more looser monetary policy to bolster their economies in the face of a growth slowdown. The Reserve Bank of India cut its benchmark rate for a third time, while Australia, New Zealand, the Philippines and Malaysia have also eased in recent weeks.
Indonesia’s policy makers are treading more carefully to avoid undermining the currency. Bank Indonesia raised interest rates six times last year to bolster the rupiah after it came under attack during an emerging-market rout.
“The policy rate is determined not only by how we are able to address the inflation rate within our target, but also how we address the stability of the rupiah, and the factors behind the rupiah mostly come from the external side,” Waluyo said.
Governor Perry Warjiyo hinted at rate cuts at last month’s policy meeting, saying the central bank will consider whether there’s room to ease, while remaining vigilant of global market risks and maintaining external stability.
Waluyo said the policy rate is only one of the tools available to support the economy, and the central bank will also use macroprudential measures and liquidity instruments as it did last year.
“We believe BI’s decision to leave the policy rate unchanged over this period of high external uncertainty is a credible
response and only serves to further bolster BI’s objective of promoting financial stability,” Nomura Holdings Inc. analysts led by Euben Paracuelles said in a note.
“We think the earliest BI can cut its policy rate is in the fourth quarter, which is when we forecast a total of 50 basis points in rate cuts.”