Bank Indonesia says inflation most important factor for rate cut

[ANKARA] Indonesia's central bank will focus on inflation data in deciding whether to cut interest rates, a central bank deputy governor said.

The current benchmark policy rate "is consistent with maintaining within our target this year, and also within target next year," Bank Indonesia Deputy Governor Perry Warjiyo said in a Bloomberg Television interview on Friday in Ankara, where he is attending a Group of 20 meeting of finance ministers and central bank governors. The bank targets price rises of 3 per cent to 5 per cent.

Bank Indonesia kept its main interest rate unchanged for a sixth month in August as China's unexpected devaluation of the yuan increased pressure on the rupiah, reducing scope for monetary easing. Indonesia's foreign-exchange reserves, which shrunk 6.9 per cent in July from a peak in February, may come under greater pressure after Bank Indonesia said last month that it would seek to prevent the rupiah from "overshooting."

""What we have now on the foreign exchange reserve, whatever metric, whatever indicator that you use, I think the level of the foreign exchange rate of Indonesia is more than adequate to support the policy on the exchange rate," said Mr Warjiyo.

BLOOMBERG