Indonesia Keeps Key Interest Rate Unchanged

Indonesia’s central bank kept its benchmark interest rate unchanged, as widely expected, on Wednesday.

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

The current 6.25 percent is the highest since 2016, when the bank made the seven-day reverse repo as its main policy rate.

The bank unexpectedly lifted the interest rate by a quarter-point in April. The bank has raised the rate by cumulative 275 basis points since August 2022.

The economy is projected to grow in the range of 4.7 percent to 5.5 percent in 2024.

The bank said inflation will remain under control, within its target of 1.5 percent to 3.5 percent this year.

The bank said the rupiah is forecast to move steadily in a strengthening trend.

Capital Economics’ economist Ankita Amajuri said Bank Indonesia’s stance is predicated on the US Fed cutting rates in November. As a result, policymakers still see room to cut rates in the fourth quarter, she added.

If the Fed loosens policy in September, the BI will cut rates as soon as October, Amajuri noted.