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[News] Indonesian Central Bank To Keep Main Interest Rate
Posted at: 17 May 2019

Indonesia's central bank on Thursday will keep its main interest rate unchanged for a sixth straight policy meeting as rising U.S.-China trade tensions renew pressure on the rupiah, a Reuters poll showed.

Some economists penciled in a rate cut in Southeast Asia's largest economy this year after the Federal Reserve turned dovish and Indonesian data, including a smaller current account gap, benign inflation and weakening GDP growth, eager for such a move.

But for this week's meeting, all 20 analysts in the poll forecast no change in Bank Indonesia's (BI) 7-day reverse repurchase rate, which has been 6.00 percent since November.

BI last year raised rates six times by 175 basis points to defend the rupiah, making it one of Asia's most aggressive central banks, amid pressure from U.S. interest rate hikes and Indonesia's large current account gap.

In the first quarter, Indonesia's economy grew more slowly than expected, as investment slowed ahead of elections. Of nine poll respondents who gave a view on the year-end benchmark rate, seven said the benchmark will be lower than now while two predicted it would still be 6.00 percent.

(source: Investment)