Indonesia’s central bank kept its benchmark BI 7-day reverse repo rate steady at 6.0 percent, reiterating this “is consistent with ongoing efforts to reduce the current account deficit to a manageable threshold and maintain the attractiveness of domestic financial assets.”
However, Bank Indonesia (BI) omitted a reference from its December statement that the policy rate was also kept steady in consideration of the global trend in interest rates in the next few months, illustrating the recent downward shift in the outlook for U.S. and European growth and thus monetary policy.
The decision to keep the rate steady was largely expected after BI Governor Perry Warjiyo on Wednesday told a panel of lawmakers that BI’s policy remains pre-emptive and the policy rate had almost reached its peak.
Wariyo added a more favorable outlook for U.S. interest rates would allow Indonesia to rely on other instruments to stabilize financial markets and support economic growth.
Bank Indonesia released the following statement: