No cuts in Indonesia likely until new policy rate comes into force

With Bank Indonesia (BI) having announced on Friday that it is planning to replace its main policy rate because the current rate has little influence over commercial banks’ lending rates, a fourth rate cut in as many months at today’s meeting never looked likely. We expect the reference rate will remain on hold at 6.75% until August, when the new seven-day reverse repo will become the main policy rate.

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