Bank Indonesia likely to cut rates before end-2015

The recent rebound in the rupiah was never likely to be enough to persuade Bank Indonesia (BI) to loosen policy, and today’s decision to leave interest rates on hold at 7.5% was no great surprise. However, in a marked change in rhetoic, the central bank today appeared to open up the possibiliy of rate cuts. Provided the rebound in the currency does not go into reverse, we think rates will be lowered before the end of 2015.