The entrance to the Bank Indonesia headquarters in Jakarta. — Bloomberg
JAKARTA: Indonesia's central bank held policy rates steady for a third consecutive review on Wednesday, as expected, aiming to maintain rupiah exchange rate stability amid global uncertainty over trade tensions.
Bank Indonesia kept the benchmark 7-day reverse repurchase rate , known as BI Rate, unchanged at 5.75%, as expected by all but two of 26 economists polled by Reuters. It also kept its two other policy rates steady.
The rupiah hit a record low earlier this month and the stock market plunged amid capital outflows triggered by the U.S. announcement of reciprocal tariffs for countries including Indonesia, though they recovered after President Donald Trump announced a 90-day tariff freeze.
BI, which has had to balance market uncertainty with concerns about Indonesia's growth outlook, said the U.S. tariffs policy and China's retaliation has heightened global uncertainties.
Governor Perry Warjiyo said the rate decision was in line with efforts to safeguard the rupiah's stability while it continue to assess future room for a cut.
The rupiah strengthened slightly to 16,860 per dollar after the decision was announced, versus 16,880 beforehand.
The central bank said it expects this year's growth for Southeast Asia's biggest economy to be slightly below the mid-point of its outlook range of 4.7% to 5.5%.
Indonesia has sent a delegation to Washington to negotiate tariffs. Finance Minister Sri Mulyani Indrawati said if the U.S. keeps its planned 32% tariff for Indonesian exports, it could reduce growth potential by 0.3 to 0.5 percentage points.
Some economists have said the direct impact from U.S. tariffs to Indonesia's economy may not be as big as the hit some other countries might be exposed to, but any Chinese economic slowdown from the impact of the trade war could hurt Indonesia more.
China is Indonesia's biggest trade partner and a major source of investment.
The central bank has previously said it has room to cut interest rates, citing low inflation. The annual inflation rate has stayed below its 1.5% to 3.5% target range so far this year, with March's rate at 1.03%. - Reuters
