The entrance of Bank Indonesia headquarters in Jakarta. — Bloomberg
JAKARTA: Indonesia's central bank stood pat on its main policy rates at its last meeting for the year on Thursday, as expected, saying current levels were consistent with efforts to maintain FX stability and keep inflation within its target range.
Bank Indonesia (BI) kept the benchmark 7-day reverse repurchase rate at 6.00%, where it has been since October. It also kept overnight policy rates steady.
All economists polled by Reuters had expected BI to left rates unchanged, predicting its board of governors would start loosening monetary policy in the third quarter of 2024.
Growth in Southeast Asia's largest economy has weakened this year as exports shrank amid falling commodity prices and sluggish global trade, while tighter monetary conditions have hurt domestic demand.
BI Governor Perry Warjiyo told a press conference that Indonesia's economic activity remains good and consumption is seen rising next year.
He added BI is monitoring inflation especially related to food prices, but that it's expected to stay within target range in 2024 and 2025.
BI has raised interest rates by a total of 250 basis points since August, 2022, a tightening cycle aimed at taming then-rising inflation and stabilising the rupiah exchange rate , which has been volatile this year due to capital outflows as the United States hiked its interest rates.
Indonesia's inflation returned to BI's target range earlier than expected this year. In November, inflation was 2.86%, within BI's 2% to 4% target range in 2023 and 2024's new inflation target range of 1.5% to 3.5%.
The rupiah has strengthened in the past week as dovish comments by Federal Reserve policymakers boosted emerging market assets. The rupiah was largely unchanged after Thursday's announcement. - Reuters
