Indonesia CB Holds Rates Unchanged As Expected

(RTTNews) - Indonesia's central bank left its key interest rate unchanged on Tuesday and lowered the growth forecast for this year amid high uncertainty in the global economy and trade.

Bank Indonesia Governor Perry Warjiyo announced that the Board of Governors decided to leave the 7-Day Reverse Repo Rate (BI7DRR) at 3.50 percent. The previous change in the rate was a quarter-point reduction in February 2020.

The deposit facility interest rate was maintained at 2.75 percent and the lending facility rate at 4.25 percent. The domestic economic recovery, which improved late in the first quarter due to increased mobility, is set to be partly damped in the coming months by restrained export volumes in the backdrop of the war between Russia and Ukraine, the bank said. The central bank lowered its economic growth projection for this year to 4.5-5.3 percent from 4.7-5.5 percent. The bank predicted inflation to remain under control within the target of 3.0±1 percent, supported by the adequate supply in response to rising demand, controlled inflation expectations, stability in the Rupiah exchange rate, and policy responses. Looking ahead, the bank expects the balance of payments to remain favorable and the rupiah exchange rate to remain stable, underpinned by sound economic fundamentals such as a lower current account deficit.