Bank Indonesia Benchmark Interest Rate Holding at 6.5%

May 5, 2010

Nine consecutive monthly rate reductions from December 2008 to August 2009 totaled 300 basis points, and now nine months have passed without a change in the rate’s 6.5% level.  A released statement after today’s monthly meeting speaks optimistically about global, regional, and Indonesian growth prospects but gives no hint of a readiness to start raising the central bank interest rate.  Growth has a good composition, being led by exports and investment.  The balance of payments has improved, and the rupiah is stronger like many of the currencies of emerging Asia.  Core and headline rates of CPI inflation in April were at 3.7% (down from January’s 4.4%) and 3.9%, and inflation is projected to stay comfortably in its 4-6% target range during the rest of 2010.

Copyright Larry Greenberg 2010.  All rights reserved.  No secondary distribution without express permission.

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