INDONESIA: VIEW: ANZ Expects 75bp Of Easing, Timing Depends On IDR
As was widely expected, Bank Indonesia (BI) left rates unchanged at 5.75% so as not to pressure the already weak rupiah further. FX stability continues to be its focus but it maintained its easing bias and so IDR stabilisation may allow it to cut rates again in the coming months, as it now expects growth to be below its forecast midpoint in 2025. ANZ revised down its terminal rate 25bp to 5.0% due to increased downside growth risks with the timing dependent on “global risk sentiment and IDR stability”.
- ANZ is more pessimistic on growth than BI forecasting 2025 at 4.7% compared to BI’s “slightly below the midpoint” of its 4.7-5.5% range.
- “The policy messaging attributes the deterioration in global risk appetite to high global economic uncertainty amid US tariff policies and emphasises the importance of IDR stability to mitigate external turmoil.”
- “BI continued to see the current account deficit at 0.5% to 1.3% of GDP and inflation within the 1.5% to 3.5% target.”
- “In his press conference, BI governor Perry Warjiyo signalled BI remains on the lookout for room to cut rates. Key considerations include IDR stability, the inflation outlook and the need to encourage growth. Notably, there has been a shift in BI’s baseline scenario for the Fed’s policy rate trajectory; BI now expects 50bp worth of cuts in 2025 (versus 25bp previously).”
- “A combination of lower SBRI yields and a stabilization in the IDR performance relative to trading partners would increase the odds of BI pulling the trigger.”
- “BI is relying on its expanded macroprudential incentives to bolster loan growth, which dipped to 9.16% y/y in March. Since 1 April 2025, banks that lend to priority sectors can lower their reserve requirement ratio by as much as 500bp, versus a maximum of 400bp previously.”
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
ASIA STOCKS: China Stocks Down as Tech Stocks Stumble.
Alibaba Chairman Joe Tsai has warned that a potential bubble is forming in the construction of data centres around the region to meet the expected demand for AI services.
China’s DeepSeek released updates to its model with the promise of better programming capabilities and its desire to remain ahead of competitors.
Hyundai Motors will invest USD$21bn in the US by 2028 with goals of reaching over 1m vehicles per year. The move is hailed by President Trump as success that tariffs work.
Whilst China fell, the rest of the region was mostly positive today as markets continue to assess the next phase in the tariff war.
- China’s Hang Seng is leading the decline down -2.10% today, with the CS! 300 down -0.20%, Shanghai Comp -0.18% and Shenzhen down -0.83%
- The KOSPI followed suit to fall -0.6% marking two successive days of losses, following last week’s strong gains.
- Malaysia’s FTSE KLCI is up +0.70% following the Central Bank’s commitment to the forecast of 4.5%-5.5% GDP growth in 2025.
- Indonesia’s Jakarta Composite has bounced back from yesterday’s significant decline to be up +1.05% following the announcement of former President Jokowi as advisor to the new Sovereign Wealth Fund.
- Singapore’s FTSE Times is having a very strong day, rising +0.86%, Taiwan’s TAIEX is up +0.88% whilst Philippines is down -0.90%.
- India’s NIFTY 50 is having a very strong period as the RBI focuses on liquidity, with the index up +0.60% in this morning’s trade, following from yesterday’s close +1.3% higher.
FOREX: USD Index Little Changed, USD/JPY Can't Test Above 151.00
Aggregate moves in G10 FX have been muted so far today. The BBDXY USD index was last down a touch to 1271.4. There has been very limited data out in the Asia Pac region, while the BoJ minutes signaled caution around further rate hikes, but didn't shift yen sentiment. BoJ Governor Ueda was also before parliament, which largely focused on balance sheet issues.
- USD/JPY was last near 150.55/60, off earlier highs of 150.94. This was close to the 50-day EMA resistance point (151.01). Yen is now slightly firmer for the session. Board members expressed caution at the January 23-24 meeting, which saw the policy rate increase 25 basis points to 0.50%, with gradual hikes touted as the most preferred path, according to the minutes. Governor Ueda stated in parliament that that the stock effect stemming from the BOJ’s significant government bond holdings would contribute to lower long-term interest rates for the time being.
- NZD/USD is down slightly, last near 0.5720, but remains above recent lows. AUD/USD is little changed, last holding close to 0.6285/90. CNH has been a touch weaker, while IDR slumped to fresh lows since the Asian Financial Crisis in 1998. This didn't spill over negatively to AUD though. Likewise in terms of weaker Hong Kong equities, which are down on data center bubble concerns.
- US equity futures sit down a touch, while US yields are off around 1bps.
- In Australia the FY2026 budget is announced at 1930 AEDT today and is widely expected to show deficits across the forecast horizon and an upward revision to the debt ratio.
- Later the Fed’s Kugler and Williams speak and US January/February housing data, March consumer confidence & Richmond Fed business conditions and March German Ifo survey are released.
JGBS: Cheaper, Gov Ueda Discusses BoJ Asset Holdings
JGB futures are weaker and hovering near session lows, -34 compared to settlement levels.
- * (MNI) BoJ board members expressed caution at the January 23-24 meeting, which saw the policy rate increase 25 basis points to 0.50%, with gradual hikes touted as the most preferred path, the published minutes showed Tuesday.
- “BoJ Governor Ueda says the central bank will take into account market conditions and assess appropriate pricing when it creates a plan for how to divest its holdings of ETFs and J-REITs. The decline in the BoJ’s JGB holdings has been extremely gradual, Ueda said when asked about the impact on bond yields stemming from the BoJ’s efforts to reduce such holdings.” (per BBG)
- “Japanese Prime Minister Shigeru Ishiba plans to draw up “powerful” measures to mitigate the impact of inflation.” (per Kyodo via BBG)
- Cash US tsys are slightly richer in today's Asia-Pac session after yesterday's heavy session.
- Cash JGBs are flat to 3bps cheaper across benchmarks, with the belly underperforming. The benchmark 10-year yield is 2.8bps higher at 1.573% and just shy of the cycle high of 1.584%.
- Swap rates are 1-2bps higher, with swap spreads mixed.
- Tomorrow, the local calendar will see PPI Services and Coincident/leading Indices data.
