BUZZ-COMMENT-IDR left in the lurch as BI prioritises growth

Jan 16 (Reuters) - Bank Indonesia's surprise policy rate cut on Wednesday signals a clear and welcome shift to prioritising growth, even as it leaves the Indonesian rupiah vulnerable to a further decline.

The 25-basis-point rate cut to 5.75% was BI's first easing since September, and defied a forecast for no change from all 30 economists in a Reuters poll.

The benchmark 7-day reverse repurchase rate is now at its lowest since September 2023 and Governor Perry Warjiyo hinted at more stimulus based on a benign inflation outlook.

This marks a sudden departure from the central bank's focus on maintaining IDR stability, as reiterated in its December policy review.

The rupiah's near 9% decline versus the dollar since end-September, uncertainty surrounding the policies of U.S. President-elect Donald Trump and the Federal Reserve's cautious stance on further rate cuts were all good reasons for BI to hold rates in January.

But with the central bank lowering its 2024 and 2025 GDP projections and with inflation in December remaining near the base of its 1.5% to 3.5% target range, it appears to have decided to support growth, risking a weaker IDR and increased volatility in the process.

The IDR has weakened 0.6% since the rate cut despite a broadly weaker dollar and it remains to be seen if the central bank can maintain stability with its triple intervention.

USD/IDR faces resistance at 16400, the July 3 high. A break opens a test of 16475, the 2024 high.

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(Krishna Kumar is a Reuters market analyst. The views expressed are his own. Editing by Sonali Desai)

((krishna.k@thomsonreuters.com))