Indonesia Keeps Interest Rates Unchanged

(RTTNews) - Indonesia's central bank maintained its benchmark interest rate on Thursday as inflation is expected to remain within the target range.

The Board of Governors of Bank Indonesia, governed by Perry Warjiyo, voted to hold the seven-day reverse repo rate to 6.25 percent.

The current rate is the highest since 2016, when the bank made the seven-day reverse repo as its main policy rate.

The bank had last raised the rate by 25 basis points in April. The bank has hiked the rate by cumulative 275 basis points since August 2022.

The bank said inflation is set to remain within the target of 1.5 percent to 3.5 percent in 2024 and 2025. Economic growth in 2024 is predicted to be in the range of 4.7 percent to 5.5 percent.

The bigger concern for BI is the weakness of the currency and the bank surprised markets with a quarter point rate hike in April, economists at Capital Economics said.

If the US Federal Reserve cut rates in September, this could pave the way for BI to cut rates in October, economists said. In contrast, financial markets are expecting further tightening in the near term, they noted.