Indonesia Monetary Policy


Central Bank leaves policy rate unchanged

At its 9 August monetary policy meeting, the Central Bank left its BI rate unchanged at a record low 5.75% for the sixth straight month, in a move that was widely expected by the market. Bank Indonesia upheld its decision by stating that the current policy rate is consistent with inflation forecasts. The Central Bank stressed that slowing global economic growth has begun to affect the country's external sector, resulting in a rising current account deficit as well as a weaker performance of exports. Nevertheless, the Bank reassured that it expects Indonesia's economy to remain solid amid global economic slowdown as well as uncertainty in the global financial market. Accordingly, the Bank confirmed its 2012 GDP growth projection of 6.1%-6.5%. Regarding price developments, policy makers underlined that inflation remains benign and is expected to stay within the Bank's target range of 4.5% plus/minus 1% going forward.


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