Indonesia keeps rate at 4¾% amid ‘uncertain global financial markets’

By Tali Rackner

Norfolk, Va., Nov. 17 – Bank Indonesia said its board of governors voted to maintain the BI seven-day reverse repo rate at 4¾% at a meeting held Wednesday and Thursday.

The policy is consistent with the bank’s cautiousness “in response to increasingly uncertain global financial markets in the wake of the U.S. election against a stable domestic macroeconomic backdrop, reflected by low inflation and a narrower current account deficit,” according to a bank statement.

Inflation remains under control and is predicted around the floor of the 2016 inflation target of 4% plus or minus 1% in the 3% to 3.2% range.

The Consumer Price Index inflation was 0.14% month-to-month and 3.31% year-over-year.

In contrast, core inflation was recorded at 0.1% month-to-month and 3.08% year-over-year, “in line with limited domestic demand, anchored inflation expectations and Rupiah appreciation.”

“Bank Indonesia considers existing monetary and macroprudential policy easing adequate to preserve national economic growth momentum,” the release said.

The bank said it will continue to strengthen policy coordination with the Indonesian government to maintain ample liquidity, boost growth stimuli and support structural reforms, therefore underpinning sustainable economic growth.

The deposit facility rate was maintained at 4% and the lending facility rate at 5½%.

As previously announced, the bank lowered the BI seven-day reverse repo rate by 25 bps to 4¾% at its meeting in October.

© 2015 Prospect News.
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