Bank Indonesia’s Policy Rates Left the Same

July 21, 2016

The main BI interest rate had be cut in four steps, most recently in June, from 7.5% to 6.5% earlier this year, and a statement released after this month’s decision not to ease further now suggests that more rate cuts lie ahead.  As of next month, the operative policy rate will switch to the seven-day repo rate, which was left unchanged at 5.25%.  The statement calls CPI inflation “controlled.”  It was at 3.45% last month, which lies in the lower half of the 3-5% target range.  Economic growth is projected to exceed 5.0% fractionally, and the current account has become “healthier.”  monetary authorities, however, are proceeding cautiously to protect the rupiah.  The currency has shown greater resilience, but high global uncertainties have officials in Indonesia and elsewhere are on edge about the possibility of renewed financial market disturbances.

Copyright 2016, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.



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