Indonesia central bank holds rates as global uncertainties re-emerge
2024.10.16 03:55
JAKARTA (Reuters) – Indonesia’s central bank on Wednesday kept interest rates unchanged, as expected, saying the decision was consistent with its objective to keep inflation within its target range through to 2025.
Bank Indonesia (BI) left the benchmark 7-day reverse repo rate at 6.00%, as expected by the majority of economists polled by Reuters, following its surprise decision to cut rates last month.
The central bank also kept the overnight deposit facility rate and lending facility rate at 5.25% and 6.75%, respectively.
Governor Perry Warjiyo said the decision was influenced by rising global market uncertainties. He said BI will continue to assess if there is room for further rate cuts, taking into account the country’s inflation, rupiah stability and growth outlook.
BI’s cut last month came just ahead of a rate cut by the U.S. Federal Reserve. Since then, the rupiah has become more volatile against the U.S. dollar on a shifting outlook for further U.S. rate cuts.Annual inflation in Southeast Asia’s largest economy cooled to 1.84% last month, the lowest since 2021 and moving closer to the lower end of BI’s target range of 1.5% to 3.5% target range.
Indonesia’s economic growth has remained steady at a solid pace of 5% post-pandemic, but that is far below the 8% target of Prabowo Subianto, who will be inaugurated as president on Sunday.
BI kept its outlook for economic growth at a range of 4.7% to 5.5% this year, and said it expected growth to accelerate next year.
