FX.co ★ Indonesia Central Bank Holds Key Rate

Indonesia's central bank held its benchmark interest rate steady on Wednesday, following an unexpected hike last month.

The Board of Governors of Bank Indonesia, under the leadership of Perry Warjiyo, opted to keep the seven-day reverse repo rate at 6.25 percent.

This rate remains the highest since 2016, when the seven-day reverse repo was established as the primary policy rate.

In a surprising move last month, the bank raised the interest rate by a quarter-point. Since August 2022, the rate has been increased by a cumulative total of 275 basis points.

The bank anticipates that inflation will stay within target levels this year. Economic growth is forecasted to fall between 4.7 and 5.5 percent in 2024.

Gareth Leather, an economist with Capital Economics, predicted that interest rates will likely stay unchanged in the coming months, with the possibility of a cut before year-end. According to Leather, the timing of any rate reductions will largely depend on the performance of the currency.