Indonesia: Bank Indonesia maintains policy rate to 6.50% in August
August 15, 2013
The Central Bank decided to hold its BI rate at 6.50% at its 15 August monetary policy meeting. The decision, which followed the 50 basis point hike in July, was in line with market expectations.
Bank Indonesia stated that it aims to, "strengthen its policy mix by optimizing an array of monetary and macroprudential policy instruments to curb inflation and maintain a more sustainable balance of payments." The Central Bank expects that its policy mix will be effective in directing 2014 inflation toward the target of 4.5% (plus/minus 1%), and also announced, "supervisory actions to control a still relatively high credit growth." The Bank continues to monitor the impact the global economy is having the national economy, including the weakening of the export sector. Going forward, the Central Bank plans to absorb excess rupiah liquidity following Ramadan, conduct long-term exchange rate stabilization, and promote lending and prudent fund raising in order to support balanced domestic economic growth.
FocusEconomics Consensus Forecast panellists expect the BI rate to average 6.59% by the end of 2013. For 2014, panellists expect the BI rate to remain virtually unchanged, ending the year at 6.50%.
Author: Carl Kelly, Economist