Bank Indonesia Leaves Rates Unchanged

At its April 8th, 2014 meeting, Bank Indonesia decided to leave the benchmark interest rate unchanged at 7.5 percent, as inflation, current account and rupiah pressures eased.
Bank Indonesia | Joana Taborda | 5/8/2014 9:27:25 AM
The deposit facility and the lending facility rate were also left unchanged at 5.75 percent and 7.50 percent, respectively.

In March, the inflation rate slowed for the third straight month to 7.32 percent and the consumer confidence index rose to its highest level since November of 2012, due to higher expectations of an improving economy. 

In February, the country recorded a USD 785.3 million surplus. Exports of oil and gas rose modestly, while imports decreased sharply, helped by a stronger rupiah. The rupiah gained 7.1 percent in the first quarter of 2014.

Excerpt from the statement by the Bank Indonesia:

This policy is consistent with ongoing efforts to steer inflation back towards its target corridor of 4.5±1% in 2014 and 4.0±1% in 2015, as well as reduce the current account deficit to a more sustainable level. Bank Indonesia considers recent developments in the economy of Indonesia as favorable and in line with previous projections, marked by lower inflation and a balance of trade that has returned to record a surplus. Looking ahead, Bank Indonesia will continue to remain vigilant of a variety of risks, globally and domestically, as well as implement anticipatory measures to ensure economic stability is preserved and stimulate the economy in a more balanced direction, thereby buoying current account performance. 

 Bank Indonesia expects the ongoing episode of domestic economic moderation to continue, leading to a more balanced and sound economic structure. As a whole, economic growth in Indonesia for 2014 remains in the range projected previously by Bank Indonesia at around 5.5-5.9%.

Looking forward, Bank Indonesia expects improvements in the external sector to continue, underpinned by a current account deficit in 2014 that can be brought down to below 3.0% of GDP and a deluge of foreign capital inflows. To this end, Bank Indonesia will continue to monitor a plethora of risks, global and domestic, which could undermine external sector resilience and its pertinent response, including the performance of external debt, in particular private eternal debt.

Bank Indonesia Leaves Rates Unchanged