BI Continues To Hold Key Policy Rate In June

Economic Research	16 June 2017
Indonesia
Economic Update
BI Continues To Hold Key Policy Rate In June BI’s board of governors held the 7-day (reverse) repo rate – the benchmark policy rate – unchanged at 4.75% on 15 Jun. We believe the central bank is to maintain its key policy rate for the rest of 2017. This is on the back of moderate inflationary pressure and a manageable current account deficit. Deposit facility and lending rates were also maintained at 4% and 5.5% respectively. Bank Indonesia (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, geopolitical issues and a potential increase in commodity prices. 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 have undermined the impact of the various economic stimuli introduced. Economist:  Rizki Fajar| +6221 2970 7065