Indonesia lifts repo rate 25 bps to 4½%, sees solid Q1 domestic growth

By Wendy Van Sickle

Columbus, Ohio, May 17 – Bank Indonesia said its board of governors decided to raise the BI seven-day reverse repo rate by 25 basis points to 4½%, effective May 18, in line with the bank’s policy “to maintain economic stability amid the escalating risks in the global financial market and global liquidity downturn,” according to a bank statement.

Inflation in April was controlled within the target corridor, underpinned by food price correction and anchored expectations, the bank said.

CPI inflation was at 0.1% month to month in April, down from 0.2% in March.

Year-over-year CPI inflation was at 3.41%, within the target range of 3.5% plus or minus 100 bps.

Meanwhile, the rupiah depreciated by 1.47% in the first quarter of 2018 and by 1.06% in April, sparked by global appreciation of the U.S. dollar.

The bank said it continues to implement rupiah exchange rate stabilization measures.

Domestic growth in Indonesia was solid in the first quarter of 2018, bolstered by domestic demand. First-quarter GDP growth was recorded at 5.06% year over year, up from 5.01% during the same period last year.

The bank noted global economic growth in 2018 is projected to improve, despite the ongoing global liquidity rebalancing.

Amid this backdrop, the bank also raised the deposit facility and lending facility rates by 25 bps each to 3¾% and 5¼%, respectively.

© 2015 Prospect News.
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