JAKARTA- Indonesia’s central bank held interest rates unchanged at a review on Wednesday, as expected, saying the current benchmark level remained consistent with keeping inflation in check and maintaining the stability of the rupiah currency.
Bank Indonesia (BI) kept the benchmark 7-day reverse repurchase rate at 6.25 percent , as predicted unanimously by 33 economists polled by Reuters.
BI also left unchanged the overnight deposit facility rate at 5.50 percent and the lending facility rate at 7.00 percent .
BI last month raised interest rates in a surprise move, seeking to try to entice foreign portfolio investors to buy Indonesian assets and strengthen the currency.
The rupiah had dropped to four-year lows against the US dollar in April. Even though it has recovered some of the losses, the currency remains vulnerable to changes in global risk sentiment related to the outlook for US monetary policy and global conflicts.
Governor Perry Warjiyo said the decision was in line with “pro-stability monetary policy” to ensure that inflation is controlled within its target while maintaining the stability of the rupiah and inflows into the country.
The currency was a touch softer at 16,005 per dollar after BI’s announcement, from 15,995 per dollar prior to the announcement.
Warjiyo said the rupiah is expected to stabilize with a tendency to strengthen, as Indonesian assets offered an attractive return to investors.
Data earlier this month showed Indonesia’s economy grew an annual 5.11 percent in the first quarter, the fastest rate in three quarters. The annual inflation rate, meanwhile, eased slightly to 3 percent in April, within BI’s 1.5 percent to 3.5 percent target range.
BI kept its growth outlook for 2024 at a range of 4.7 percent to 5.5 percent , compared to last year’s 5.05 percent .
