Indonesia Keeps Rates on Hold


The central bank of Indonesia left its benchmark repo rate unchanged at 4.25 percent on December 14th 2017, in line with market expectations, saying it aims to maintain macroeconomic stability and support the domestic economic recovery. The lending and the deposit facility rates were also left steady at 5 percent and 3.5 percent respectively.

Excerpts from the Bank Indonesia Press Release:

The policy is consistent with efforts to maintain macroeconomic and financial system stability, while also building domestic economic recovery momentum by considering the latest global and national economic dynamics. Bank Indonesia perceives the previous easing of monetary policy as sufficient to continue driving the economic recovery process against a backdrop of increasingly robust macroeconomic stability. Looking forward, Bank Indonesia will remain vigilant of the global risks associated with the monetary policy normalisation in several advanced countries and the geopolitical risks, as well as corporate consolidation at home along with the suboptimal bank intermediation function. Furthermore, Bank Indonesia shall continue to improve it mix of monetary policy, macroprudential policy and payment system policy to strike an optimal balance between macroeconomic and financial system stability and the ongoing economic recovery process. In addition, Bank Indonesia will also strengthen policy coordination in conjunction with the Government in order to preserve macroeconomic and financial system stability. Bank Indonesia currently believes that amidst the global economic gains and domestic economic stability achieved lies an opportunity to build stronger and more sustainable domestic economic momentum through consistent structural reforms.

National economic growth is projected at 5.10% (yoy) for 2017, increased from 5.02% (yoy) in 2016. The Bank Indonesia projects economic growth in 2018 at 5.1-5.5% (yoy).

Looking ahead, Bank Indonesia projects a slightly wider current account deficit in 2018 due to the ongoing domestic economic recovery but remaining at a healthy level of 2.0-2.5% of GDP.

Inflation is maintained at the low level of 3.5% (yoy), which is still within the inflation target of 4.0±1% for 2017. Bank Indonesia projects low and controlled inflation in 2018 within the new target corridor of 3.5±1%. 

Indonesia Keeps Rates on Hold


Bank Indonesia | Joana Taborda | joana.taborda@tradingeconomics.com
12/14/2017 4:33:25 PM