JAKARTA. Analysts predict that Bank Indonesia (BI) will lower the BI 7-Day Reverse Repo Rate or the benchmark interest rate in the upcoming Board of Governors' Meeting on Wednesday (17/7) and Thursday (18/7).
According to PT Pemeringkat Efek Indonesia (Pefindo) economist Fikri C. Permana, it is forecast that this month's Board of Governors' Meeting will cut the interest rate by 25 basis points (bps) from 6.00% to 5.75%. He also projects that so far BI will only lower the interest rate once until the end of the year.
"However, this projection can change in the next two or three months, depending on the market," said Mr Permana as quoted by Kontan.co.id, Tuesday (16/7).
Mr Permana added that BI has enough room to lower the interest rate as the rupiah exchange rate continues to strengthen with rising foreign capital inflows.
On the other hand, US Federal Reserve Chair Jerome Powell has signaled a dovish stance recently, including in a testimony last week. "BI should cut the benchmark interest rate rather than wait [for the Fed]," said Mr Permana.
If BI delays the lowering of the interest rate, said Mr Permana, volatility could return to the financial market because many investors are already anticipating the possibility of a lower interest rate in the coming weeks. (AM/MS)