Indonesia set to extend interest rate pause as risks build up for rupiah


Indonesia’s central bank will probably leave its benchmark interest rate unchanged, as policymakers look set to act to support the rupiah only when volatility from global uncertainties become excessive.
Thirty of the 31 economists surveyed by Bloomberg expect Bank Indonesia to keep its seven-day reverse repurchase rate at 5.75% for a ninth straight meeting. That is in line with the latest signal from Governor Perry Warjiyo, who in an interview underlined the need to hold the rate “for a while” while keeping an eye on global spillovers and signs of volatility.
As Warjiyo’s comments were made before the Israel-Hamas war caused jitters in the global financial markets, one economist sees the possibility of a quarter-point hike to help stabilise the currency.
The rupiah has been this month’s worst-performer among 12 Asian currencies tracked by Bloomberg, as investors flee riskier assets and alarm grows about the conflict spreading in the region.

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