Bank Indonesia Ends Streak of Rate Cuts

September 3, 2009

Indonesia’s benchmark central bank rate was left unchanged at 6.5% as expected but nevertheless a streak of nine consecutive monthly reductions, totaling 300 basis points and consisting of six cuts of 25 basis points each and three of 50 bps.  A statement from monetary officials left no doubt that policy is in a transitional stage with a statement about the future that promises “to take the necessary measures to safeguard macroeconomic stability while maintaining a conducive climate for the economy.”  Note that inflation containment is mentioned first now before the promotion of growth.  The statement predicts that despite ticking up in August, inflation is likely to resume its downtrend in the remainder of 2008 but that such will probably start trending higher next year.  Real GDP rose 4.0% in the year to 2Q09, and officials expect the economy’s momentum to keep building.

Copyright Larry Greenberg 2009.  All rights reserved.  No secondary distribution without express permission.


Comments are closed.