Indonesia is not aggresive enough to anticipate the impact of COVID-19 on the economy
JAKARTA. The decision of Bank Indonesia (BI) to maintain its benchmark interest rate at 4.5% is considered not aggressive enough in responding to the effects of the coronavirus pandemic (COVID-19) to the economy.
Anthony Kevin, an analyst from Mirae Asset Sekuritas, said that BI may cut its benchmark interest rate further, especially after seeing a number of economic data related to the spread of COVID-19. Then a number of consensus gathered had predicted that there would be further cut in the benchmark interest rate by 25 bps.
"[Some of the data] should encourage the central bank to cut the benchmark interest rate," Kevin explained through his research report.
Kevin added, the cut would also help anticipate the weakening of the rupiah in the near future, even though Indonesia's financial markets have strengthened again.
"Usually, foreign investors do sell-off in the stock market in May, which is then followed by the weakening of rupiah," said Kevin. (KR/AR)