Bank Indonesia maintains its benchmark interest rate at 3.50 percent, as expected.
Due to inflation and geopolitical uncertainty, Indonesia’s central bank has cut its growth prediction for 2022, but has kept interest rates at a record low to aid the economy’s recovery.
In a Reuters poll, all economists predicted Bank Indonesia (BI) to keep the benchmark seven-day reverse repurchase rate at 3.50 percent on Tuesday. Other policy rates for the overnight interbank money market remained unchanged.
Even as other Asian central banks began to tighten monetary policy to offset a jump in commodity prices as the Ukraine-Russia crisis exacerbates supply chain disruptions, BI has been resolute about keeping interest rates low for as long as feasible.
Although consumer prices jumped to a two-year high of 2.64 percent in March, inflation in Southeast Asia’s largest economy remained within BI’s goal range of 2 percent to 4 percent.
Jakarta has kept inflation under control by subsidizing some fuel costs and meddling in the price of cooking oil.
On the other hand, the commodity price upcycle has bolstered Indonesia’s exports and trade surplus, giving it a cushion against global monetary tightening, especially aggressive US rate hikes, according to economists.