Bank Indonesia Keeps Benchmark Rate at 4.75%

The central bank is expected to keep its benchmark interest rate steady at 4.75 percent at this month's policy rate meeting, as inflation is considered to be under control, and in anticipation of further expected increases in the United States federal funds rate. (Reuters Photo/Darren Whiteside)

By : Tabita Diela | on 10:36 PM April 20, 2017
Category : Business, Featured, Banking/Finance

Jakarta. Bank Indonesia, the central bank, decided to keep its benchmark rate unchanged as it braces to face global uncertainties and domestic challenges from increasing inflation.

"The decision is consistent with Bank Indonesia's effort to keep the macroeconomic and financial system stable," Bank Indonesia executive director Tirta Segara said in a press conference on Thursday (20/04).

The bank's seven-day reverse repo rate stayed at 4.75 percent, while its deposit facility rate stayed at 4 percent and lending facility rate at 5.5 percent.

Tirta said the central bank will examine the global challenges such as the Fed's plan to start reducing its balance sheet, which may result in strengthening of the dollar and weakening of the rupiah, and other geopolitical uncertainties.

Keeping the benchmark rate unchanged, Tirta said, is also part of the central bank's effort to stabilize the rupiah exchange rate.

Tirta said the rupiah has been stronger by 1.09 percent as of March 31 and traded at Rp 13,326 against the US dollar on the back of incoming foreign capital in stocks and bonds, which was bolstered by attractive investment opportunities in the country.

March inflation was 3.61 percent annually, lower compared to 3.83 percent in February, but still higher compared to 3.49 percent in January. Bank Indonesia targets a 3 percent to 5 percent inflation this year.

Bank Indonesia's director for monetary and economic policy Dody Budi Waluyo said the central bank is keeping a neutral stance, which allows it to increase the benchmark rate if needed.

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