BI Keeps 7-Day Repo Rate at 4.25% to Maintain Stability

JAKARTA (TheInsiderStories) – Bank Indonesia has decided to keep its 7-day Reverse Repo Rate at 4.25 per cent in a bid to maintain macroeconomic stability.

Deposit Facility and Lending Facility rates are also kept unchanged, the central bank announced after holding Bank Indonesia monthly board meeting on Nov. 15-16. The rates were effective from Nov. 17.

“The decision is consistent with the efforts to maintain the stability of the macro economy and financial system, as well as stimulating the economic growth, while at the same time taking into account the dynamics of the global and domestic economy,” the central bank said.

The central bank’s interest rate level is considered adequate to guard the pace of inflation in line with the target and acceptable current account deficit and allow domestic economy to grow in a healthy way.

The current account deficit is expected to remain contained at 1.7 percent of GDP in 2017 and 1.9 percent in 2018, with the overall balance of payments remaining in a surplus.

Bank Indonesia, however, said it remains vigilant on a number of risks originating from global markets, due to tightening monetary policy in a number of advanced countries as well as from domestic, including subdued household consumption and bank intermediary function.

“Bank Indonesia will continue to coordinate with the government to strengthen the policy mix in an effort to maintain the stability of macro economy, financial system and strengthening the structural reforms that will provide a solid foundation of Indonesia’s economy,” the central bank said.

In the third quarter, Indonesia’s gross domestic product (GDP) grew by 5.06 per cent year-on-year, higher than in the first quarter of 2017 at 5.01 per cent, led by investment and exports.

Meanwhile, the global economy is projected to grow by 3.6 per cent in 2017 and 2018, led by China, Japan, Eurozone and the US.

Writting by Roffie Kurniawan, Email: