Bank Indonesia’s Benchmark 5.75% since February Was Retained

July 12, 2012

In the Great Recession, Bank Indonesia cut its key interest rates from 9.5% to 6.5%, a low that was then maintained from August 2009 until a 25-basis point rate hike in February 2011.  That tightening proved short-lived when officials eased anew by 25 bps last October, 50 bps in November and 25 bps to 5.75% in February of this year.  At this month’s regular policy meeting, the Board of Governors kept the rate at 5.75% and released a statement that noted that the “global economic slowdown has started to affect Indonesia’s external performance so that Indonesia’s economy is expected to chart lower growth relative to previous forecast” and depicts inflation as currently “benign.”  Going forward, officials pledged “strengthened monetary operation and macroprudential policy, including maintaining adequate liquidity and promoting financial deepening, are aimed to stabilize Rupiah and manage inflation expectation.”

Copyright 2012, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.



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