Shocking Rate Decision in Indonesia Sparks Market Jitters and Forecast Frenzy

Indonesia’s central bank sprang a surprise on October 22 by keeping its key interest rate unchanged at 4.75%, defying widespread expectations of a rate cut. This decision – announced at the conclusion of Bank Indonesia’s Board of Governors meeting – caught markets off guard, as most forecasters had penciled in a fourth consecutive cut. Economists polled before the meeting overwhelmingly predicted a 25 basis-point reduction to 4.50%reuters.com. In fact, a Wall Street Journal survey found six out of seven economists expected a cut, given the benign inflation backdrop and efforts to spur growthmorningstar.com. Instead, BI opted to pause its easing cycle, a move Governor Perry Warjiyo acknowledged was contrary to market betsidnfinancials.com.