Indonesia's central bank held its BI rate steady at 5.75 percent, as expected, saying this is consistent with the bank's inflation target for this year and 2014, and the economy will expand as forecast in the first quarter.
Bank Indonesia (BI), which cut its rate by 25 basis points last year, said first quarter economic growth will reach a forecast 6.2 percent, mainly supported by strong domestic demand based on improved consumer confidence and purchasing power.
However, there are signs of continued moderation in investment activity that began in the fourth quarter, especially in non-construction.
"On the other hand, exports to many major trading partners, particularly China, the United States and India, is expected to improve," the BI said in a statement.
For 2013, the central bank said it expects growth in the lower end of a 6.3-6.8 percent range.
Indonesia's headline inflation rate rose to 5.31 percent in February from January's 4.6 percent with core inflation at 4.29 percent. The central bank targets inflation of 4.5 percent, plus/minus 1 percentage point.
Indonesia's Gross Domestic Product contracted by 1.45 percent in the fourth quarter from the third for annual growth of 6.1 percent, slightly down from the third quarter's rate of 6.17 percent.