Bank Indonesia: Policy Unchanged as Expected

October 15, 2015

The rupiah’s vulnerability continues to impede the central bank’s ability to cut the 7.5% BI interest rate.  From a peak of 7.75% after 200 basis points of increase between June and November of 2014, there has been just one cut in February of this year.  Rupiah depreciation has caused inflation to elevate, with a 6.83% on-year pace in September according to a statement released by the bank’s board of governors after today’s monthly meeting. “Domestic economic growth was expected to rebound on the back of greater government capital spending despite relatively sluggish activity in the private sector. Bank Indonesia believed that the pressures on macroeconomic stability has eased, making room to loosen its monetary policy. However, with a high uncertainty in the global market, Bank Indonesia will remain vigilant and continue to monitor global risks despite more conducive conditions on global financial markets.”

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



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