Bank Indonesia Retains BI Rate of 7.5%

May 19, 2015

The May meeting of the Board of Governor concluded with today’s released statement keeping Indonesia’s 7.5% main reference interest rate and laying policy objectives:

The BI Board of Governors decided on 19th May 2015 to hold the BI Rate at 7.50%, while setting the Deposit Facility and Lending Facility rates at 5.50% and 8.00% respectively. The decision is in line with the tight bias monetary policy to keep inflation in its target of 4±1% in 2015 and 2016 as well as to manage the current account deficit at around 2.5-3% of GDP in the medium term. To keep the economic growth momentum, Bank Indonesia has loosened macroprudential policy by revising the LDR-RR regulation, LTV policy for mortgage loans as well as down payments on automotive loans. Furthermore, Bank Indonesia will also continue to strengthen coordination with the Government not only in terms of controlling inflation and managing the current account deficit, but also by accelerating fiscal stimulus to boost economic growth.

On the economy, officials expect growth to rebound in the current quarter, observed a better trade balance, attributed recent rupiah losses to general U.S. dollar strength, speaks of contained core inflation and anchored inflation expectations, and called the banking system resilient.

In February, the BI rate was sliced by 25 basis points.  That was the first cut in three years.  In between, hikes of 25 bps were done in November 2013 and November 2014.

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



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