[Kabar-indonesia] Dow Jones Preview: Analysts See Indonesia Sept CPI Up, Oct Rate Cut

[JoyoNews at aol.com]

Preview -- Analysts See Indonesia Sept CPI Up, Oct Rate Cut

By Phelim Kyne

JAKARTA, October 2 (Dow Jones)--An expected seasonal rise in 
September on-month inflation won't decrease the likelihood of a 
25- to 50-basis point cut in the benchmark Bank Indonesia 
one-month rate next week, analysts say.

A Dow Jones Newswires survey of five regional economists, produced a
consensus forecast of September inflation at 0.46% on month and 14.66%
on year.

Those projections compare with 0.33% on month and 14.90% on year in August.

Indonesia's official Central Statistics Agency is slated to issue
August trade and September consumer price index data Monday around
0630 GMT.

Despite the expected increase in on-month inflation, analysts expect
Bank Indonesia to cut its benchmark rate, currently at 11.25%, when
the central bank's board of governors holds its regular monthly
meeting October 5.

Bank Indonesia has said a mild uptick in September inflation would
likely be linked to the Islamic fasting month of Ramadan, which began
Sept. 24, and wouldn't derail ongoing monetary policy easing.

The central bank has cut its benchmark rate four times since its
current loosening cycle began in May.

Although Ramadan requires observant Muslims to refrain from eating and
drinking from dawn to dusk, Indonesians break the daily fast with
lavish banquets and late-night eating sprees that substantially boost
consumption during the month.

"Even though inflation in September may be higher on seasonal factors
like the fasting month, I don't think it will be significant...so our
plans to continue to cut the interest rate (in October) are still
open," Bank Indonesia Deputy Governor Aslim Tadjuddin said Monday.

Tadjuddin said the benchmark rate would likely fall to around 10.00%
by the end of 2006. That projection compares with those of analysts
who expect the benchmark rate to decline in tandem with easing on-year
inflation to 7.00%-8.00% by the end of the year.

Indonesia likely recorded a relatively robust trade performance in
August due to high prices and strong demand for oil, gas and
commodities exports, analysts said.

The Dow Jones Newswires survey produced a consensus forecast of a
$3.26 billion trade surplus in August, with a 17.75% on-year growth in
exports and 2.81% expansion in imports.

Indonesia - Southeast Asia's largest economy - recorded a $3.44
billion trade surplus in July, as exports grew 26.2% on year and
imports rose 11.6%.

Forecasts of Indonesia September CPI, August trade data

Institution            CPI     CPI    Exports       Imports
Surplus
                         on-mo   on-yr

CIMB-GK           +0.50%  +14.69% +20.00%  +5.00%    $2.97B
BII                     +0.60%  +14.81% +19.70%  +1.92%    $3.11B
Action Economics  +0.30%  +14.50% +22.00%  +1.00%    $3.30B
Lippo Bank        +0.40%  +14.57% +05.00%  +4.50%    $3.65B
Danareksa         +0.52%  +14.71% +22.03%  +1.64%    $3.29B

Consensus         +0.46%  +14.66% +17.75%  +2.81%    $3.26B

Forecasts of Bank Indonesia rate move

Institution                        Change in Bps
IdeaGlobal.com
Bank Internasional Indonesia       -25
ING                                           -50
Action Economics                      -25
Danareksa                                 -50
CIMB-GK                                   -25

Bank Indonesia's current policy rate is 11.25%

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Joyo Indonesia News Service
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