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Indonesia's central bank seen standing pat on rates for now: poll

Tuesday, October 18, 2016 - 13:43
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Indonesia's central bank will keep its benchmark interest rate unchanged at a two-day policy meeting that ends on Thursday, most respondents in a Reuters poll said.

[JAKARTA] Indonesia's central bank will keep its benchmark interest rate unchanged at a two-day policy meeting that ends on Thursday, most respondents in a Reuters poll said.

Thirteen of 17 economists predicted Bank Indonesia (BI) will hold the 7-day reverse repurchase rate at 5 per cent. The other four forecast a 25 basis point cut.

Out of seven respondents giving a year-end view, five expected the benchmark to be 5 per cent then, and two projected 4.75 per cent.

BI has cut its benchmark five times this year by a total of 125 basis points in a bid to get banks to lend more and boost economic growth.

But loan growth has remained sluggish. In August, annual expansion was 6.83 per cent, the slowest pace since Nov 2009.

After BI's last rate cut on Sept 22, Governor Agus Martowardojo said the central bank was still in an easing mode that would continue until early 2017.

Indonesia's annual inflation rate rose slightly in September to 3.07 per cent, near the bottom of BI's 3-5 per cent target range.

REUTERS