JAKARTA – Indonesia’s central bank on Tuesday kept its benchmark interest rates unchanged for a third straight meeting, predicting headline inflation would be back within its target sooner and after the rupiah currency strengthened significantly.
Southeast Asia’s biggest economy has been supported by a commodities-led export boom, though economists expect a slowdown in growth as policy tightening around the world poses a drag on global demand.
Bank Indonesia (BI) left the 7-day reverse repurchase rate unchanged at 5.75 percent, as expected by all 30 economists polled by Reuters. It also kept steady its two other policy rates.
Governor Perry Warjiyo told a news conference the current benchmark level remained sufficient to keep core inflation within BI’s 2 percent to 4 percent target range and steer headline inflation to within the same target band sooner than previously estimated.
“Last month inflation was already at 4.9 percent, this will continue easing … We believe that starting August, it could be below 4 percent,” he said, referring to the headline inflation rate in March of 4.97 percent which was the lowest in seven months.
BI previously expected headline inflation to return to target in September.
Meanwhile, with sentiment for riskier assets improving amid market forecasts that US rates were near their peak, the rupiah has strengthened by almost 4 percent in the past month, even with some depreciation this week. – Reuters
