JAKARTA: Indonesia's central bank kept policy rates unchanged for a second straight review on Wednesday, as expected, against a backdrop of turmoil in local markets on concerns about global trade wars and the government's fiscal policy.
Bank Indonesia held the benchmark 7-day reverse repurchase rate steady at 5.75%, as expected by 19 of 31 analysts polled by Reuters. The rest had expected a rate cut.
The central bank also left its overnight deposit facility and lending facility rates unchanged at 5.00% and 6.50%, respectively.
The decision comes after the rupiah currency and Jakarta's main stock index had dropped sharply on Tuesday as traders worried about the government's fiscal strategy and the growth outlook.
The rupiah, which extended losses on Wednesday morning, was largely steady after BI's announcement, trading at 16,515 per dollar to be near its lowest levels in five years.
BI had previously said its next interest rate cut was a matter of timing, reflecting the pressure on the rupiah, which has also been weakened by capital outflows linked to uncertainty about U.S policy and interest rates.
"Looking forward, BI will continue to observe prospects of inflation and economic growth to take advantage of room for a BI rate cut, while considering the rupiah movement," Governor Perry Warjiyo told a press conference.
February saw the first annual fall in the consumer price index since March 2000, largely due to the government's electricity price discount, which meant it sat well outside BI's inflation target range of 1.5% to 3.5%.
Growth in Southeast Asia's largest economy has for years stuck around 5%. Prabowo has a target of lifting growth to 8% during his term, which runs until 2029.
BI kept its growth outlook for 2025 at 4.7% to 5.5%. - Reuters
