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Jakarta Post

Bank Indonesia maintains key rate at 4.25%

  • Marchio Irfan Gorbiano

    The Jakarta Post

Jakarta   /   Thu, March 22, 2018   /   08:39 pm
Bank Indonesia maintains key rate at 4.25% The Bank Indonesia building on Jl. MH Thamrin in Central Jakarta. Bank Indonesia's seven-day reverse repo rate was kept at 4.25 percent. (JP/Wienda Parwitasari)

Bank Indonesia (BI) has decided to maintain its reference rate as it believes the current level can provide macroeconomic and financial system stability and support the recovery of the domestic economy.

BI's seven-day reverse repo rate was kept at 4.25 percent, while the deposit facility and lending facility rates were maintained at 3.5  and 5 percent, respectively.

The central bank said the previous monetary easing policy was sufficient for driving momentum in the economic recovery.

“The decision was consistent with the efforts to maintain macroeconomic and financial system stability, and it also supports the recovery of the domestic economy,” BI spokesman Agusman told reporters in a press briefing in Jakarta on Thursday.

However, he said that BI would continue to monitor external risks stemming from a more hawkish outlook of the United States' Federal Reserve and the tendency of “inward-oriented trade policy” in a number of countries as well as domestic risk from inflation. 

BI’s decision was made against the backdrop of the first Fed Fund Rate's (FFR) increase in 2018 by 0.25 percent to a range between 1.5 percent and 1.75 percent on the back of positive US economic data after US President Donald Trump issued a tax cut policy. 

“Bank Indonesia continues to optimize monetary, macroprudential and payment system policies to maintain the balance between macroeconomic and financial system stability and the ongoing economic recovery, particularly in mitigating an increase in short-term risks,” said Agusman. (dmr)