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Indonesia Monetary Policy April 2021

Indonesia: Central Bank keeps rates steady in April

At its monetary policy meeting held on 19–20 April, Bank Indonesia (BI) decided to leave the seven-day reverse repo rate at the all-time low of 3.50%, where it has been since its meeting in February.

The Bank’s decision reflected a balancing act between its commitment to fueling economic momentum amid a dimming growth outlook, and the need to support the currency and thus prevent depreciation-fueled price pressures. BI revised its growth outlook downwards, and now expects the economy to expand 4.1%–5.1% this year (previous forecast: +4.3%–5.3%), due to a recent extension of Covid-19 restrictions into early May.

Looking ahead, BI maintained its dovish tone in its communiqué, pledging to stick to an “accommodative monetary” stance and reiterating its commitment to “accommodative macroprudential policy”.

Commenting on the Bank’s strategy, Nicholas Mapa, senior economist at ING, stated:

“BI will likely be on hold until pressure on the currency dissipates substantially, with the Central Bank likely to push other lending measures to support growth in the near term.”

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