Bank Indonesia Plans 4.50% Rate Cut Amid Growth Concerns

Indonesia's central bank, Bank Indonesia (BI), is expected to cut its benchmark interest rate by 25 basis points to 4.50% amid efforts to support economic growth despite a weaker rupiah and slowing domestic demand. Economists view this move as manageable in terms of capital outflow risk if accompanied by aggressive policy measures, such as interventions in the forex market and maintaining attractive yields on rupiah-denominated instruments. Inflation in Indonesia remains stable within target, allowing room for monetary easing, though concerns exist about potential threats to BI's independence and the risk of overheating the economy with excessive easing. Meanwhile, Turkey's central bank is signaling a cautious approach to further rate cuts due to rising inflation, which hit 33.3% in September, with policymakers indicating a slowdown in the pace of easing after significant reductions earlier in the year. Turkish officials have communicated to foreign investors their readiness to slow rate cuts or pause them if inflation pressures persist, reflecting uncertainty about future monetary policy amid high price levels. This contrasts with Indonesia's current stance where easing is still pursued to bolster growth, highlighting differing monetary policy challenges in the two economies.