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7 Mar 2013
Forex Flash: Bank Indonesia cautious regarding GDP growth prospects – TD Securities
Bank Indonesia left the reference rate unchanged at 5.75%, as expected, and put more stress on inflation, saying that they will monitor the development of food prices, but also added some new cautious wording concerning the prospects for GDP growth.
“Although we warned that BI’s rhetoric is likely to gradually become more hawkish in the coming months, the overall tone of the statement remained fairly neutral”, wrote TD Securities analysts Cristian Maggio and Marcin Budkiewicz, pointing to BI's expectations of benign inflation. “This view is not new to BI, although they recognize upside risks stemming from the potential adjustment of administered prices”, they said, adding that GDP growth is predicted to fall near the lower limit of the 6.3-6.8% range, and support for growth continues to stem from strong consumer demand, although investment is moderating.
“Although we warned that BI’s rhetoric is likely to gradually become more hawkish in the coming months, the overall tone of the statement remained fairly neutral”, wrote TD Securities analysts Cristian Maggio and Marcin Budkiewicz, pointing to BI's expectations of benign inflation. “This view is not new to BI, although they recognize upside risks stemming from the potential adjustment of administered prices”, they said, adding that GDP growth is predicted to fall near the lower limit of the 6.3-6.8% range, and support for growth continues to stem from strong consumer demand, although investment is moderating.