Thursday, September 8, 2011

Bank Indonesia Keeps BI Rate at 6.75%

Indonesia's central bank, Bank Indonesia, kept the BI reference rate on hold again at 6.75%.  The Bank also widened the interest rate corridor band for monetary operations to 150 basis points below the BI rate from 100bps previously.  The Bank said:"The decision was taken by considering the importance of maintaining macroeconomic stability amid the heighten uncertainty in the global financial system triggered by the US and Euro area debt. Although the impacts of uncertainty in the global economy on domestic economy are so far limited, Bank Indonesia continues to monitor the developments and assess their impacts on Indonesian economic performance going forward."

At its August meeting, the Bank also maintained the key monetary policy rate (the BI Rate) unchanged at 6.75%.  Previously the Bank raised the BI rate by 25 basis points to the current 6.75% in February 2011.  Indonesia reported annual inflation of 4.79% in July, 4.61% in June, 5.98% in May, 6.16% in April, and 6.65% in March, and just inside the inflation target of 5% +/-1% in 2011 (which changes to 4.5% +/-1% in 2012).  Bank Indonesia has previously forecast GDP growth of 6.3-6.8% in 2011 and 6.4-6.9% in 2012 for the Indonesian economy, meanwhile Indonesia reported annual GDP growth of 6.5% in the June quarter this year.


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