JAKARTA- Indonesia’s central bank kept interest rates steady on Wednesday, emphasizing its focus on stabilizing the rupiah currency amid global uncertainties, but said further easing to prop up economic growth is only a matter of timing.
The benchmark 7-day reverse repurchase rate was held steady at 5.75 percent, as expected by 26 out of 35 economists polled by Reuters. The remaining nine had predicted a cut. Bank Indonesia also left its two other policy rates unchanged.
Wednesday’s decision followed a rate cut in January that markets had not expected. In the current cycle, BI has cut rates twice since September.
Southeast Asia’s largest economy grew 5.03 percent in 2024, roughly similar to the previous year and in line with expectations, but the pace was the slowest in three years and far behind President Prabowo Subianto’s 8 percent target.
Meanwhile, the strong US dollar and global trade disputes have put pressure on the rupiah and other emerging market currencies.
Acknowledging that inflation was low and the domestic economy needed stimulus, Governor Perry Warjiyo said there is room for BI to cut interest rates further, but the timing depends on global dynamics.
Uncertainty regarding US trade policy, the US fiscal deficit, rising treasury yields as well as the Federal Reserve’s monetary easing path was the main consideration to keep rates unchanged for now, he said.
“We still see room for further interest rate cuts … As for the timing, we must consider global dynamics,” Warjiyo told a press conference.
“We fully support the government’s programs. We are with the government, we want high economic growth,” he added.
