Moody's downgrades Indonesia outlook, sounding a credit warning or triggering a downward chain reaction

The Moody’s decision to downgrade Indonesia’s credit outlook is a warning. OCBC Bank Group Research Department economists wrote in a report that if policy-making continues to face increasing uncertainty, other rating agencies may follow suit. Moody’s previously downgraded Indonesia’s credit outlook from “Stable” to “Negative.” This latest move has once again dealt a blow to Indonesia’s policy perception. OCBC Bank stated, “Short-term sentiment may remain volatile.” The authorities’ response will be under closer scrutiny, as credible policy choices over the next 12 to 18 months will be crucial in preventing further credit rating downgrades.