Monday, April 25, 2016

BI Held Benchmark Policy Rate at 6.75%, Retaining Accommodative Stance

25 April 2016


Rates & FX View


BI Held Benchmark Policy Rate at 6.75%, Retaining Accommodative Stance

Highlights

¨                  BI held the BI policy rate at 6.75% after 3 consecutive 25bps cuts year-to-date
¨                  The 7D reverse repo rate was kept at 5.5%; deposit/lending facility rate kept at 4.75% and 7.25% respectively
¨                  Variable-rate tenders (tenors ranging from 1-week to 12-months) will be employed; fixed 1-week instrument will be benchmark
¨                  BI project stronger 1Q16 and 2Q16 GDP growth; stronger bank loan growth on lower cost of funding
¨                  BI policy rate likely to remain unchanged ahead of the August framework shift; base case for BI to hold the new-framework 7D rates at 5.5% from August 2016
¨                  Reiterating our IDR forecast of 13,100 by 4Q16 on average; upgrading our IndoGB yield forecasts

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