Bank Indonesia

December 17, 2015

Monetary authorities in Indonesia also left their key interest rate unchanged after their latest review.  The BI rate has been at 7.5% since a 25-basis point cut in February, and a statement released today reveals that officials are hoping conditions will allow them to ease further next year.  ” Bank Indonesia believes that rooms for monetary easing are open, on the back of preserved macroeconomic stability, specifically end-2015 inflation that is projected to be below 3%, and current account deficit, projected at around 2% of GDP.”  However, recent financial instability affecting many emerging economies including Indonesia requires caution now.  They will need to verify that inflation behaves as they expect and be sure that undue weakness in the rupiah doesn’t put inflation on a higher-than-assumed trajectory.

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



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