Indonesia keeps rate unchanged at 7˝%; inflation remains ‘controlled’

By Susanna Moon

Chicago, April 14 – Bank Indonesia said it has opted to hold the BI rate at 7˝%, setting the deposit facility rate at 5˝% and the lending facility rate at 8%.

The move is aimed at keeping inflation within the target of 4% plus or minus 1% for 2015 and 2016 and moving the account deficit toward a “healthier level” at 2.5% to 3% of GDP in the medium term, according to a bank press release.

Inflation was “controlled” in March, in line with the inflation target. After recording a deflation for the first two months of the year, inflation was 0.17% month to month or 6.38% year over year in March, stemming from administered prices, the bank noted.

The economic recovery worldwide that carried on was “sluggish,” in line with the weaker-than-expected gain in the U.S. economy, the bank said.

In Indonesia, first-quarter growth was moderate with a rebound forecast in the second quarter of 2015, the release noted.

Looking ahead, the bank said the economy may grow slower in 2015, nearing the lower end of the 5.4% to 5.8% range.

The rupiah fell as the dollar gained on nearly all global currencies, according to the bank.

© 2015 Prospect News.
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