18.11.202109:48:00UTC+00Indonesia Central Bank Keeps Rate Unchanged

Indonesia's central bank left its key interest rate unchanged for the ninth consecutive meeting on Thursday.

The board of governors of Bank Indonesia decided to hold the the BI 7-Day reverse repo rate at 3.50 percent. The previous change in the rate was a quarter-point reduction in February.

The deposit facility rate was maintained at 2.75 percent and the lending facility rate at 4.25 percent.

The board reiterated that the decision was in line with the need to maintain stability in the exchange rate and financial system, amidst low inflation forecasts and efforts to support economic growth.

Inflation in 2021 and 2022 was predicted to remain within the target range of 2-4 percent.

GDP growth in the fourth quarter of 2021 was forecast to improve, supported by improved export performance, increased government fiscal spending, as well as increased consumption and investment.

The bank expects economic growth to accelerate further in 2022, driven by increased mobility in line with accelerated vaccination, the opening of wider economic sectors, and continued policy stimulus.

A large output gap and weak inflation mean the central bank is in no hurry to follow other EM central banks by tightening policy, Gareth Leather, an economist at Capital Economics, said.

The economist expects BI to leave rates unchanged not just until the end of this year, but throughout 2022 as well.