TEMPO.CO, Jakarta-Bank Indonesia (BI) is expected to keep its benchmark interest rate (BI Rate) at 6.5 percent. The central bank will make the decision today in its Board of Governors (RDG) meeting.
"For this month's RDG, BI will likely hold an assessment on how the BI Rate cuts are affecting the economy in the first semester," economist Josua Pardede told Tempo Thursday, July 21, 2016.
Josua said there are a number of global dam domestic considerations for that assessment. From the domestic side, the main consideration would be June inflation, which Josua said is still under control and within BI's inflation target range of 3.0-5.0 percent.
External factors include the condition of Indonesia's economy in the aftermath of UK's exit from the European Union.
"The rupiah is also stable at Rp13,100 per US dollar," he said.
However, Josua said there is a possibility that BI will implement some macroeconomic easing and lower the BI Rate again. "The space for easing is still open and there is a possibility for another BI Rate cut by 25-50 bps before this year ends," he said.
The central bank has cut its benchmark rate four times this year, each by 25 bps. The last cut was on June 17, making the current BI Rate of 6.5 percent.
GHOIDA RAHMAH
