Indonesia Central Bank Keeps Rate Unchanged

(RTTNews) - Indonesia's central bank kept the key interest rate unchanged for the seventh straight session as inflation is expected to remain within the target in the near-term.

The Board of Governors of Bank Indonesia, led by Governor Perry Warjiyo, voted to hold the seven-day reverse repo rate at 5.75 percent.

The deposit facility rate was maintained at 5.00 percent and the lending facility rate at 6.50 percent.

The central bank hiked the benchmark rate by 225 basis points in the current tightening cycle that began in August 2022.

The decision was consistent with the monetary policy stance to ensure that inflation remains within the target range of 2-4 percent in the remaining period of 2023 and 1.5- 3.5 percent next year.

The economy is projected to grow in the range of 4.5-5.3 percent, unchanged from the previous outlook.

Indonesia's economy is expected to struggle in the near-term due to weak global demand and high interest rates, Capital Economics' economist Shivaan Tandon said. With inflation set to remain within target and the economy weak, interest rate cuts will start from October, the economist added.

In the statement, the bank said the focus of monetary policy is directed at strengthening the stabilization of the currency exchange rate to mitigate the spillover impact of global financial market uncertainty.

The central bank had issued new set of instruments to attract foreign capital inflows and stabilize the currency exchange rate.