INDONESIA: October Pause As BI Leaves Door Open To Further Easing
Again Bank Indonesia (BI) surprised by doing the opposite of consensus expectations. On Wednesday it held rates at 4.75% when it had been forecast to cut 25bp. This pause followed three consecutive monthly rate cuts. BI’s assessment of the economy and the need to support growth was broadly unchanged from last month when it eased, so another rate cut in November or December remains likely. It maintained its willingness to support government measures to boost the economy.
- The reasons for the hold were in line with those given for September’s rate cut – the decision was consistent with inflation within the target band, with FX stability and cooperation to boost growth. However, it has added the transmission mechanism to the monitoring list in the first paragraph.
- In September BI voiced its concern that lending rates were only marginally lower despite 125bp of easing in 2025 and now this month it is “monitoring the transmission effectiveness of accommodative monetary policy”.
- It continues to see the global economy moderating, domestic growth as solid but below capacity, IDR stable, inflation within the corridor and BoP “sound”.
- It no longer seemed concerned about the impact of softer consumer confidence on consumption even though it moderated in September to 115.0 from 117.2, the lowest since April 2022. It did state that “there remains a further opportunity to strengthen domestic demand”. It noted that core inflation was being pressured by spare capacity.
- It kept its 2025 growth forecast unchanged at “above the midpoint of the 4.6-5.4% range” and that 2026 will be stronger. Q3 growth was driven by exports and government spending.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
MNI EXCLUSIVE: A EU Business Leader In China Discusses Trade Relations
A European business leader in China discusses current trade relations between Brussels and Beijing On MNI Policy MainWire now, for more details please contact sales@marketnews.com.
USA: "*TRUMP TO DELIVER REMARKS TO UNGA AT 9.50AM ET, TUES"
- USA: "*TRUMP TO DELIVER REMARKS TO UNGA AT 9.50AM ET, TUES"
FOREX: JPY Crosses - Mixed Performance
US Equities, just another day and another all-time high, nothing stops this train. This morning US futures have opened a little lower, E-minis -0.02%, NQU5 -0.02%. The JPY performance in the crosses is pretty mixed with EUR/JPY trying to regain its upwards momentum and the rest seem to be stalling or in NZD/JPY’s case moving lower.
- EUR/JPY - Overnight range 173.84 - 174.39, Asia is trading around 174.40. The pair has found decent buyers and is back up towards its recent highs looking to regain the momentum higher. First support seen back towards the 173.00 area.
- GBP/JPY - Overnight 199.38 - 199.79, Asia trades around 199.65. This pair could not extend its break higher and has failed again above 200.00. Buyers need to reassert the momentum higher again soon or the probability of a deeper pullback increases. First support seen back towards the 198.00 area.
- NZD/JPY - Overnight range 86.50 - 86.82, Asia is currently dealing 86.50. This pair remains the outlier thanks to the poor NZ GDP data last week, while below 88.00/88.50 I continue to have a bias lower. Anyone looking for a vehicle to express a long JPY in the crosses should look to this pair, if cross JPY does move lower NZD/JPY should lead.
- CNH/JPY - Overnight range 20.7515 - 20.8377, Asia is currently trading around 20.7500. This pair has remained above its pivotal 20.30/20.40 support. The pair continues to trade sideways comfortably within its recent 20.40-21.00 range.
Fig 1 : CNH/JPY 2H Chart
Source: MNI - Market News/Bloomberg Finance L.P
