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Indonesia Keeps Key Rate Steady For Eighth Month

Indonesia's central bank left its key interest rate unchanged for an eighth policy session in a row on Thursday.

The Board of Governors of Bank Indonesia, led by Governor Agus Martowardojo, left the 7-day repo rate at 4.75 percent. The decision was in line with economists' expectations.

"The decision is consistent with Bank Indonesia's efforts to maintain macroeconomic and financial system stability, while supporting a continuous domestic economic recovery," the bank said in a statement.

The central bank said that the US Federal Reserve's rate hike and its plan to unwind its large balance sheet, results of the UK election, and the potential decrease in commodity prices, especially oil, are the salient risks that demand vigilance.

On the domestic front, the risks include the impact of adjusting administered prices on inflation, coupled with ongoing consolidation in the corporate and banking sectors, the bank said.

The bank retained its growth forecast for this year in the 5.0-5.4 percent range, which it expects to be supported by accelerating exports and investment and resilient household consumption.

The bank said it will control inflation within the target corridor for 2017, namely 4±1 percent.

"To that end, policy coordination to control inflation between the central government, regional administrations and Bank Indonesia must be strengthened to handle soaring volatile food prices during the holy fasting month and Eid-ul-Fitr," the Bank Indonesia said.

by RTT Staff Writer

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