Indonesia holds rate at 7½%; inflation ticks up, stays in target zone

By Susanna Moon

Chicago, May 19 – Bank Indonesia said it has decided to hold the BI rate at 7½%, setting the deposit facility rate at 5½% and the lending facility rate at 8%.

The bank is holding to its tight bias monetary policy of keeping inflation within the target of 4% plus or minus 1% for 2015 and 2016 and managing the account deficit at 2.5% to 3% of GDP in the medium term, according to a bank press release.

Inflation was again “controlled” in April, the bank said, which supports its inflation target in 2015. CPI inflation was at 0.36% month to month or 6.79% year over year in April, ticking up from 0.17% month to month and 6.38% year over year in the previous period.

Growing inflation pressures derive from administered prices, while core inflation and volatile foods were managed well, the bank said.

Economic recovery continues to be one-sided, the bank said, with risks in the global financial markets and economic growth expected to be slower than projected.

The bank also held the rate unchanged at its meeting last month.

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