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BI holds rate despite acknowledging inflation may exceed target
Bank Indonesia (BI) acknowledged that inflation may rise above its target range of 2 to 4 percent.
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BI Governor Perry Warjiyo speaks during the International Monetary Fund (IMF) and World Bank annual meetings in Nusa Dua, Bali, on Oct. 14, 2018.
(AFP/Sonny Tumbelaka)
B
ank Indonesia (BI) decided on Tuesday to hold its benchmark seven-day reverse repo rate (7DRRR) at 3.5 percent, despite acknowledging that annual inflation may climb higher than expected.
The central bank also decided to keep the lending rate and deposit rate at 4.25 and 2.75 percent, respectively, following a two-day meeting.
“This decision is in line with the need to control inflation, maintain exchange rate stability and support the economic growth amid heightened external pressure in relation with Russia-Ukraine geopolitical tension, and developed and developing countries’ act to normalize their monetary policies,” BI Governor Perry Warjiyo told reporters during a live briefing.
Read also: Govt seeks vast energy subsidy hike
Perry went on to say that annual inflation this year could slightly exceed the central bank's target range of between 2 and 4 percent, but would return to below 4 percent next year.
BI's rate decision comes after annual inflation spiked to 3.49 percent in April, from 2.64 percent in March, as the government revoked price caps on non-subsidized fuel and cooking oil.
Perry said the inflationary pressure would likely continue for quite some time, as commodity prices remained high.
