Bank Indonesia: No Rate Change

October 8, 2013

The BI interest rate has previously been raised by 25 basis points in June, 50 bps in both July and August and 25 bps in September.  The rate cumulatively rose from 5.75%, the level since February 2012 to the current level of 7.25% in a response to elevated inflation and rupiah depreciation that was aggravating such.  Most recently, however, inflation had settled back to 8.4% in September, and pressure on the exchange rate has receded partly.  Consequently, analysts correctly anticipated the decision by the Board of Governors not to change policy further this month.  A statement of explanation speaks of a cooling global economy amid “ubiquitous uncertainty,” decelerating domestic demand, and a narrowed current account deficit, and the opinion is posited that inflation will drop from 9+% in 2013 to within the 3.5-5.5% 2014 target corridor.

Copyright 2013, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.



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