Indonesia Leaves Rates on Hold

At its June 12th, 2014 meeting, Bank Indonesia left the benchmark interest rate unchanged at 7.5 percent for the seventh straight meeting. The deposit facility and the lending facility rate were also left unchanged at 5.75 percent and 7.50 percent, respectively.

Excerpt from the statement by the Bank Indonesia:

The policy is consistent with ongoing efforts to steer inflation back towards its target corridor of 4.5±1 percent in 2014 and 4.0±1 percent in 2015, as well as reduce the current account deficit to a more sustainable level. Bank Indonesia considers the ongoing economic rebalancing process to be progressing as expected, despite several risks that require vigilance, and will continue to institute anticipatory measures to ensure the inflation target can be achieved and current account performance can be improved. To that end, Bank Indonesia continuously strives to strengthen its monetary and macro prudential policy mix as well as implement policy that underpins the structure of the domestic economy and manages external debt, particularly corporate external debt. Furthermore, Bank Indonesia will also continue to redouble coordination efforts with the Government in terms of inflation control and the current account deficit.

Looking ahead, Bank Indonesia expects the trade balance to rebound thanks to manufactured export activity as the global economy recovers and imports subside in line with moderating domestic demand. In terms of the financial account, an influx of foreign capital inflows is predicted as the domestic economic outlook improves. 

Indonesia Leaves Rates on Hold

Bank Indonesia | Joana Taborda |
6/12/2014 11:58:22 AM