Indonesia's central bank decided to maintain its benchmark interest rate at its current level on Wednesday, a move that was largely anticipated by market analysts.
The decision was made by the Board of Governors of Bank Indonesia, under the leadership of Perry Warjiyo, who chose to hold the seven-day reverse repo rate steady at 6.25 percent.
This rate, at 6.25 percent, marks the highest point since 2016, the year when the seven-day reverse repo became the primary policy rate.
Notably, the central bank raised the interest rate by a quarter of a percentage point unexpectedly in April, contributing to a cumulative increase of 275 basis points since August 2022.
Looking ahead, the economy is forecasted to grow within a range of 4.7 percent to 5.5 percent in 2024.
Inflation is expected to remain under control, within the bank's target range of 1.5 percent to 3.5 percent for this year. Additionally, the rupiah is projected to follow a steady strengthening trend.
According to Ankita Amajuri, an economist at Capital Economics, Bank Indonesia's current stance assumes that the US Federal Reserve will cut rates in November. Amajuri elaborated that this belief leaves room for Indonesian policymakers to consider reducing rates in the fourth quarter.
Should the Fed ease its policy in September, Amajuri anticipates that Bank Indonesia may cut rates as early as October.
