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Indonesia Keeps Rate Unchanged As Expected

Indonesia's central bank left the key interest rate unchanged for a sixth consecutive month on Thursday.

The Board of Governors agreed to hold the BI 7-day reverse repo rate at 6 percent, Bank Indonesia said in a statement. The decision came in line with expectations.

The bank left the Deposit Facility and Lending Facility rates at 5.25 percent and 6.75 percent, respectively.

The decision was consistent with efforts to maintain the external stability of Indonesia's national economy, the bank said.

BI observed that more efforts to boost domestic demand will be required going forward, to mitigate the adverse impact of exports amid moderation in global growth. The central bank forecast Indonesia's economy to grow below the midpoint of the 5.0-5.4 percent range in 2019.

Franziska Palmas, an economist at Capital Economics, said it is too soon to pencil in rate cuts given the country's large current account deficit, which makes the currency vulnerable to sudden falls during periods of weak risk appetite.

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