Bank Indonesia has kept the seven-day reverse repo rate at 3.5 percent amid expectations of muted inflation and relatively low capital flight risk.
ank Indonesia (BI) has left the benchmark interest rate unchanged at 3.5 percent, a rate it deems appropriate for supporting the country’s economic recovery while maintaining macroeconomic and financial stability.
The central bank also kept the deposit facility and lending facility rates at 2.75 and 4.25 percent, respectively.
“This decision is in line with the need to maintain the stability of the exchange rate and financial system, amid the forecast of low inflation and efforts to support economic growth,” BI Governor Perry Warjiyo said in a virtual press briefing on Thursday, following BI’s November monetary policy meeting.
The decision comes as the consumer price index (CPI) moves generally upward, although the annual inflation rate remained muted in October at 1.66 percent, which is below BI’s target range of 2 to 4 percent.
Read also: Inflation rises for fourth month in a row to 1.66% in October
Perry noted, however, that the inflation rate was forecast to fall within the central bank’s target range for the full year, as well as in 2022.
With improvements occurring in mobility and factory activity, Indonesia’s economic growth in the October-to-December period is expected to improve, according to the governor.
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