By Gayatri Suroyo and Stefanno Sulaiman
On Wednesday, Indonesia's central bank, Bank Indonesia (BI), decided to keep its benchmark 7-day reverse repurchase rate at 6.25%, in line with expectations. The overnight deposit facility and lending facility rates were also left unchanged at 5.50% and 7%, respectively.
BI Governor Perry Warjiyo emphasized the importance of a strong rupiah for the Indonesian economy, citing its impact on prices and inflation. The central bank has room to cut rates in the fourth quarter but is currently focused on supporting the rupiah's exchange rate against the U.S. dollar.
Inflation has been steady within BI's target range, easing to 2.13% last month. The rupiah has strengthened by 5% this month, nearing its highest level of the year, as the U.S. dollar weakens in anticipation of rate cuts by the Federal Reserve.
Warjiyo expects the Fed to cut rates twice this year and three times in 2025. Some economists predict that BI will wait for a Fed cut before implementing its own policy easing, likely in the fourth quarter.
Overall, BI's decision to maintain interest rates reflects its commitment to rupiah stability and economic growth, aligning with global trends of central banks easing policy to stimulate growth.
Stay informed about the latest developments in Indonesia's economy and how they could impact your investments.
Source: Multibagger
Analysis: Indonesia's central bank's decision to keep interest rates steady highlights its focus on rupiah stability and potential future rate cuts. This move could impact inflation, investment opportunities, and overall economic growth in Indonesia. Investors should monitor developments closely and consider adjusting their portfolios accordingly to capitalize on potential opportunities or mitigate risks.