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Indonesia: Monetary policy to remain accommodative amid bening inflation – ANZ

Assessing Monday's inflation report from Indonesia, "Indonesia’s headline inflation came in at 2.68% y/y in January, comfortably
within the central bank’s 2-4% target band for 2020," noted analysts at Australia and New Zealand Banking Group (ANZ).

Key quotes

"Food prices were the main contributor to inflation, while administered prices softened. With inflation benign, monetary policy is set to remain accommodative, and we continue to look for a 25bp cut by Bank Indonesia in 2020."

"Core CPI, which excludes volatile food and government-controlled prices, rose by 0.18% m/m, bringing the y/y increase to 2.88%. In terms of the y/y trends, headline CPI picked up from 2.59% y/y in December to 2.68% in January based on the new series."

"The upshot is that inflation is likely to stay comfortably within the central bank’s 2020 target band of 2.0-4.0%. The combination of contained inflation and a sluggish growth outlook suggests it is still too soon to call the end of BI’s easing cycle."

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