Bank Indonesia

November 8, 2012

Following the monthly policy meeting, central bank officials in Indonesia retained a 5.75% reference rate and released an upbeat statement that observed

  • An improved current account, whose deficit has fallen to 2.4% of GDP in 3Q12 from 3.5% in the second quarter.
  • Contained inflation that is likely to hover near the center of its 3.5-5.5% target band over the coming year.
  • Lessening selling pressure on the rupiah.
  • Slightly lower but nonetheless sound economic growth that’s somewhat above 6.0%.
  • A well-functioning financial system.

Broad policy goals of containing the external deficit, promoting growth with stable prices, and coordinating actions with the government were reaffirmed.

In the Great Recession, the reference rate was cut 300 basis points to 6.5%, where such remained until a 25-basis point hike in February 2011.  Three reductions were administered subsequently of 25 bps in October 2011, 50 bps in November 2011, and 25 bps in February 2012.  That was the last change.

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

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