Bank Indonesia Keeps 7.75% Reference Rate and Reviews 2014 Trends at First Policy Meeting of 2015

January 15, 2015

A statement released by the Board of Governors today notes

  • A weaker-than-expected and altogether uneven global recovery.
  • A slowdown last year of domestic economic growth in Indonesia.
  • An improved balance of payments during 2014, with the rupiah falling against the dollar but rising against many other currencies.
  • Inflation in 2014 was 8.36% (yoy), lower than the 8.38% posted in the previous year.  Intense pressures from administered prices and volatile foods posed challenges, yet officials managed to prevent overall inflation from accelerating.  A target of 3-5% this year is considered achievable.
  • Looking forward, “policy will consistently aim to control inflation towards its target corridor and reduce the current account deficit to a more sustainable level through interest rate policy and stabilizing the exchange rate in line with its fundamental value.”

The BI rate was hiked by 25 basis points in November, one year after the prior change one year earlier, which was also a 25-bp increase.  Today’s statement gives no concrete guidance regarding the next interest rate change.

Copyright 2015, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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