Bank Indonesia keeps policy rate unchanged at 6 percent

Bank Indonesia (BI) will keep its interest rate unchanged amid rising uncertainties in the global financial market, adopting a monetary policy stance it called “cautious neutral” and “data dependent”.

After a two-day board of governors meeting, the central bank maintained its policy rate – the seven-day reverse repo rate – at 6 percent, a level unchanged since November last year. Lending and deposit rates were also kept at 6.75 and 5.25 percent respectively.

BI governor Perry Warjiyo said the decision was to maintain Indonesia’s external stability amid elevated uncertainties in the global financial market. He added that the central bank would continue to monitor the latest developments in monetary policy.

“BI will continue to monitor the global financial market and external stability in deliberating the room for accommodative monetary policy in line with low inflation and the need to boost domestic economic growth,” said Perry in Jakarta on Thursday.

He emphasized that BI’s accommodative macroprudential policy remained in place to ensure banking liquidity remained adequate.

Perry added that the escalating tensions between the United States and China would also influence Indonesia’s export performance, which resulted in a revision to the central bank’s current account deficit outlook.

The central bank now expects the current account deficit to be recorded between 2.5 and 3 percent of GDP this year, compared to its previous outlook of 2.5 percent of GDP. (bbn)