BI decided to hold the rate at a record low of 3.5 percent in December but might raise rates sooner than expected in response to the Fed's more aggressive monetary stance.
ank Indonesia (BI) decided in its December meeting to hold the benchmark interest rate at a record low 3.5 percent as the central bank seeks to support the country's economic recovery while maintaining stability.
Aside from leaving the seven-day reverse repo rate unchanged, BI also held the deposit facility and lending facility rates at 2.75 and 4.25 percent, respectively.
“This policy is in line with the need to safeguard exchange rate and financial system stability amid the low inflation forecast and efforts to support economic growth,” BI Governor Perry Warjiyo said in a press briefing on Thursday.
The consumer price index (CPI) was up 1.75 percent year-on-year (yoy) in November, continuing its upward trend, albeit somewhat gradually, Statistics Indonesia (BPS) data shows. This inflation rate is muted compared with that in other countries, especially advanced economies such as the United Kingdom, which recently saw its decade-high inflation rate.
Read also: BI to stay dovish until late 2022, but no more rate cuts
With 2021 coming to a close, BI has estimated the annual inflation rate to be lower than its target range of between 2 and 4 percent, but as the economy recovers, inflation is forecast to eventually fall within range.
The central bank estimated Indonesia’s gross domestic product (GDP) to grow by between 3.2 and 4.4 percent this year.
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