Friday, May 19, 2017

BI Continues To Hold Key Policy Rate In May

Economic Research
19 May 2017

Economic Update

Bank Indonesia’s (BI) board of governors held the BI 7-day (reverse) repo rate – the benchmark policy rate – unchanged at 4.75% on 18 May. We believe the Central Bank would maintain its key policy rate for the rest of 2017 on:
1. Moderate inflationary pressure;
2. Manageable current account deficit.

Deposit facility and lending rates were also maintained at 4% and 5.5% respectively. BI believes that the move is consistent with its efforts to maintain macroeconomic and financial stability, while preserving the domestic economic recovery process. This is against a backdrop of global risks in the form of the current discourse over US policy direction, along with geopolitical risks, specifically in the Korean Peninsula. There are also domestic risks with regards to upward changes in administered price inflation, as well as ongoing consolidation in the corporate and banking sectors, which has undermined the impact of economic stimulus.

Economist:  Rizki Fajar| +6221 2970 7065

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