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Indonesia Central Bank Keeps Rate Unchanged

Indonesia's central bank maintained its key rates at its first policy meeting this year, after lowering by a cumulative 125 basis points in 2020.

The Board of Governors of Bank Indonesia decided to retain the BI 7-day reverse repo rate at 3.75 percent. The bank had reduced the rate by a quarter-point in November.

The central bank retained its deposit facility interest rate at 3.00 percent and the lending facility rate at 4.50 percent.

The decision was consistent with forecast for low inflation and maintained external stability, as well as efforts to support economic recovery, the bank reiterated.

The improvement in economic growth seen towards the end of 2020 is forecast to gradually increase in 2021.

The current account deficit is projected to be around 1 percent to 2 percent of GDP in 2021. Further, the bank noted that the currency exchange rate strengthened on stabilization measures and continued foreign capital inflows.

Inflation is expected to remain within the 2-4 percent target range this year. The bank said it remains committed to maintain price stability and strengthen policy coordination with the government to bring inflation to the target.

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