Indonesia's central bank left its benchmark BI 7-day RR Rate at 4.75 percent, along with its other key rates, saying it "believes that the previous monetary and macro prudential policy easing will continue to boost domestic growth momentum."
Bank Indonesia (BI) adopted the BI 7-day RR rate as its new benchmark in August and has cut it twice by a total of 50 basis points following reductions in September and October. Prior to August BI cuts its previous benchmark, the BI rate, four times from January through June by 100 points.
"At home, the national economy performed solidly, underpinned by maintained domestic demand," BI said, keeping its forecast for 2016 economic growth of 5.0 percent, up from 4.8 percent in 2015.
Last month BI revised its 2016 growth forecast from 4.9-5.3 percent.
BI also maintained its 2017 growth forecast of 5.0-5.4 percent - which in November was trimmed from 5.1-5.5 percent - as exports are expected to benefit from higher prices and domestic demand benefiting from a stronger corporate sector.
Indonesia's Gross Domestic Product grew by an annual rate of 5.02 percent in the third quarter of this year, down from 5.19 percent in the second quarter.
Inflation this year is still seen in the 3.0-3.2 percent range and next year the BI predicts its will remain within the target range of 4.0 percent, plus/minus 1 percentage points.
"Several inflation risks require careful observation, especially relating to volatile food and the planned adjustments to administered prices," BI said.
Indonesia's inflation rate rose to 3.58 percent in November from 3.31 percent in October.
Indonesia's rupiah has firmed most of this year on positive sentiment about the domestic economic outlook though this rise was "derailed somewhat in November after the US Presidential election," BI said.
"Looking forward, Bank Indonesia will continue to monitor the risk of a sudden capital reversal linked to the ambiguous US policy direction and implement exchange rate stabilization measures in line with the rupiah's fundamental value by maintaining market mechanisms," BI said.
The rupiah was trading around 13,425 to the U.S. dollar today, down from 13,305 before the U.S. Federal Reserve's rate hike on Dec. 14 but still up by 2.8 percent since the start of the year.
Bank Indonesia issued the following statement: