No Change in Indonesia Monetary Policy

April 20, 2017

As analysts expected, Bank Indonesia’s seven-day reverse repo rate, the main policy benchmark, was left at 4.75%, the level since a sixth and final 25-basis point reduction made during 2016. This occurred last October and followed similar moves in January, February, May, June, and September. Monetary officials also left their overnight deposit and lending rates steady at 4.0% and 5.5%, respectively.

In a released statement, the Board of Governors call Indonesia’s economic outlook promising. Global economic risks have lessened but require continued monitoring. The Fed’s move closer toward reducing the size of its balance sheet is one risk that’s mentioned explicitly. Indonesian economic growth last quarter was not quite as buoyant as expected, but some acceleration is thought likely this quarter. The first-quarter trade surplus was more than twice the size of that a year earlier, and the rupiah extended its appreciation last month. Inflation is below the middle of the 3-5% target range but seen likely to climb within that band.

Copyright 2017, Larry Greenberg. All rights reserved. No secondary distribution without express permission.



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