JAKARTA- Indonesia’s central bank held its benchmark interest rate steady on Wednesday, as expected, saying the current level remained consistent to manage inflation through to 2025 and stabilize the rupiah, while eyeing room for easing in the fourth quarter.
The seven-day reverse repurchase rate, known as the Bank Indonesia (BI) Rate was maintained at 6.25 percent , where it has been since April, as expected by all 35 economists polled by Reuters. BI also kept other policy rates unchanged.
Governor Perry Warjiyo said the decision would ensure inflation remained within the target range in 2024 and 2025, while the short-term policy focus was directed at strengthening the rupiah currency and attracting inflows.
BI has been focusing on managing the rupiah’s volatility, including by intervening in the currency and bond markets, with inflation already within its target range since the middle of last year.
The rupiah has seen bouts of weakness this year due to a resilient US dollar as well as investors’ concerns regarding Jakarta’s fiscal prudence under an incoming government that is set to take office in October.
The currency has recovered by around 2 percent in recent weeks since hitting a four-year low last month.