Governor Agus Martowardojo and his board held the seven-day reverse repurchase rate at 4.75 percent, as forecast by all 28 economists surveyed by Bloomberg. The bank went on a cutting spree last year, lowering rates six times, but has been on hold since the last move in October as inflation pressures picked up.
“We will not change our
stance as long as there’s no sign of an impact on inflation, in particular core
inflation, and the expectation of depreciation in the exchange
rate,” Assistant Governor Dody Budi Waluyo told reporters in
Inflation which hit a 14-month high of 4.3 percent last month, mainly due to higher energy costs is set to remain elevated through June as Indonesians mark Ramadan, the Muslim fasting month when food prices generally spike. The central bank aims to keep inflation in a range of 3 percent to 5 percent.
Martowardojo said last week that government-controlled prices which climbed 9.14 percent in May from a year earlier and include costs like electricity tariffs would continue to be a concern for the central bank board.
“Looking ahead, the economy
would benefit from further support from the central bank," though a rate
cut is unlikely, said Gareth Leather, a senior Asia economist at Capital
Economics Ltd. in
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