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Indonesia Central Bank Keeps Rates On Hold

Indonesia's central bank retained its record low interest rate for the fifteenth consecutive time as policymakers were more concerned about inflationary pressures stemming from planned fuel price increases than risks to growth.

As widely expected by economists, the Bank Indonesia maintained its benchmark interest rate at 5.75 percent. Policymakers observed that inflation remains in line with the target range of 3.5 percent to 5.5 percent.

Inflation has slowed to 5.57 percent in April from 5.9 percent in March. But policymakers are wary of inflationary pressures from the proposed plan to cut fuel subsidies.

Southeast Asia's largest economy grew only 6.02 percent in the first quarter, which was the weakest since 2010. The nation's household spending, one of the biggest contributor to the economic output slowed, dragging both imports and investment.

The bank now expects the economy to grow in the lower range of 6.2 percent-6.6 percent growth forecast this year.

by RTT Staff Writer

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