Bank Indonesia (BI), which cut its rate by 25 basis points in February, added that inflationary pressures in June were less intense than previously thought with the annual inflation rate in June at 7.26 percent, up from 7.15 percent in May while core inflation was 5.04 percent.
In June BI merely said that it was confident of meeting its inflation target for 2015.
In today's statement the BI board of governors underlined that its decision to maintain an accommodative policy stance was taken to maintain macroeconomic stability "despite widespread global uncertainty" and "intense" risks on global financial markets from uncertainty surrounding a rise in U.S. interest rates, the crises in Greece and stock price shocks in China.
Economic growth in Indonesia is expected to remain "limited" in the second quarter but then rebound in the third quarter as infrastructure projects are implemented and banks extend more lending, BI said, confirming its expectations from June.
For 2015 BI has said it expects growth of 5.0 to 5.4 percent. In the first quarter annual growth slowed to 4.71 percent - the slowest rate in more than five years - from 5.01 percent in the fourth quarter of last year.
Indonesia's rupiah has been depreciating against the U.S dollar since April 2014 and in June declined by an average of 1.28 percent to 13,311 a dollar, the BI said, attributing most of the depreciation to external factors linked to concerns over the Greek debt restructuring negotiations along with investors' anticipation of the Federal Reserve's policy direction.
Demand for foreign exchange to repay debt and to make seasonal dividend payments in the second quarter exacerbated pressures on the rupiah, the BI said, adding that it will continue to "maintain rupiah stability in line with its fundamental value."
The rupiah was trading at 13,297 to the dollar today, down 6.5 percent this year.
Bank Indonesia issued the following statement: