Good morning everyone!
I just wanted to post this for some people to keep in mind the state of Indonesia's economy. Let's remember, as investors it's great to have both sides of the story. Telling other individuals their point of view is wrong will not help the collective. There are so many factors in the success of this company outside of the daily price action. If you're a day trader - trade the way you want to trade. As a long term investor, do your research outside of this website. Enjoy!
Kit
06:28 AM EDT, 10/18/2019 (MT Newswires) -- Indonesia's central bank could cut its benchmark rate for the fourth consecutive time next week to support growth in an environment where inflation remains "contained" and currency "reasonably stable," according to a research report from Australia and New Zealand Banking Group.
Bank Indonesia is expected to lower its policy rate by a further 25 basis points to 5.00%, ANZ Research economist Krystal Tan said in the note on Friday. The central bank, which has cut rates by 25 basis points at each of the last three meetings, is forecast to ease policy one more time this year, if not in October.
"Our current forecast is for policy rate to end the year at 5.00% but we acknowledge that the risk of deeper cuts is increasing," Tan said in the report.
"With the central bank keen to support growth, inflation contained and external stability under control, the door for further easing in October is open."
The report pointed out that the recent data continue to point to sluggish economic activity, supporting the case for another rate cut. Private consumption growth may be losing momentum in Indonesia as motor vehicle and motorcycle sales have collectively fallen by 5% year-over-year in the first two months of the third quarter, compared with a 1.9% decline a year ago. Consumer confidence fell for the fourth straight month in September.
On the inflation front, price pressures remain contained and will not prevent the central bank from easing monetary policy, Tan said. Both headline and core inflation are "comfortably" within its 2.5% to 4.5% target band. Given that Indonesia's trade data suggests the current account deficit likely narrowed in the third quarter relative to a year ago, the dollar-rupiah exchange rate has been "reasonably stable." The currency has been supported by continuing portfolio flows, especially into bonds, as rock bottom interest rates in developed markets continue to push investors overseas in the hunt for higher yields in emerging markets.
"Overall, we see scope for at least one more 25 basis-point cut in Bank Indonesia's easing cycle this year, if not in October," Tan said in the report. "However, we acknowledge that the risk of a deeper easing cycle is rising." The main downside risk to ANZ's forecast is a material improvement in Indonesia's balance of payments dynamics or a more aggressive-than-expected easing from global central banks that would trigger a review of its outlook.
