Bank Indonesia Keeps Rates On Hold For Fourth Session
2024-08-16
2600
(fxcue news) - Bank Indonesia retained its interest rate for the fourth straight session on Wedneday as inflation is estimated to remain within the target range.
The Board of Governors headed by Perry Warjiyo decided to maintain the seven-day reverse repo rate to 6.25 percent.
The current rate is the highest since 2016, when the bank made the seven-day reverse repo as its main policy rate.
The deposit facility rate and the lending facility rate were kept unchanged at 5.50 percent and 7.00 percent, respectively.
The decision is consistent with the objective of stabilizing the rupiah exchange rate and also to ensure that inflation remains within the target band of 1.5 to 3.5 percent this year and next, the bank said.
In July, consumer prices posted a 2.13 percent annual increase, which was within the target range.
The central bank said the increase in fiscal stimulus in 2024 to 2.7 percent of GDP is expected to provide a multiplier effect on the economy. Economic growth is forecast to be in the range of 4.7 to 5.5 percent this year.
The rupiah will continue to strengthen against the dollar, which should open the door for the central bank to cut rates soon, economists at Capital Economics said.
The economists said the BI won't want to ease policy before the Fed, but that it will probably start in October.
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