Indonesia: Bank Indonesia stays put
April 21, 2017
At its 18 and 20 April monetary policy meeting, Bank Indonesia decided to hold the BI seven-day Reverse Repo rate at 4.75%. The decision was widely expected by market analysts after the Bank had made several rate cuts in 2016. In addition, the Bank decided to hold the lending facility rate and the deposit facility rate at 5.50% and 4.00%, respectively.
Bank Indonesia’s unchanged stance is due to the moderate growth and inflation outlook for the economy. A lackluster yet healthy outlook for the domestic economy should keep domestic prices pressures in check, despite upcoming adjustments to administered prices. Meanwhile, the backdrop of a tightening Federal Reserve has reduced space for easing.
The Bank provided little forward guidance, stating that it will monitor adjustments in prices and other domestic events closely. The majority of our panelists see the Bank holding rates steady throughout this year.