ank Indonesia (BI) will keep its Seven-Day Reverse Repo Rate (7DRRR) unchanged at 4.75 percent for the eighth time in a row since October 2016, citing high potential inflation and external pressures amid the United States Federal Reserve’s plan to raise interest rates in June.
The central bank will continue to adopt a neutral monetary policy until the middle of this year and will prioritize economic stability for the sake of sustainable economic growth, BI Governor Agus Martowardojo said at a press briefing on Thursday.
"We will also allow the rupiah exchange rate to fluctuate but it has to reflect economic fundamentals," he said after attending a quarterly meeting of the BI Board of Governors as reported by Antara.
BI wants to keep the inflation rate this year at between 3 percent to 5 percent year-on-year (yoy).
The inflation rate reached 4.17 percent yoy in April, he said, adding that the central bank would stay alert for inflationary pressures as the government is likely to go ahead with a plan to adjust the electricity subsidy.
The bank also sees that inflationary pressures might arise from prices for volatile foodstuffs at the end of May due to high demand during the fasting month of Ramadhan. (bbn)
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