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Indonesia holds benchmark rate steady at 7.75%

[JAKARTA] Indonesia's central bank on Thursday kept its benchmark interest rate at 7.75 per cent as expected, saying the rate is consistent with efforts to keep inflation at its target and have a healthy current account deficit.

Bank Indonesia (BI) has held the rate steady since raising it 25 basis points in November, one day after the government hiked fuel prices more than 30 per cent.

All but one of 15 analysts in a Reuters poll predicted BI would hold rates on Thursday, due to anticipation that inflation will cool following a spike in December.

Annual inflation in December was 8.36 per cent, above BI's earlier forecast of 7.7-8.1 per cent, and compared to around 4-5 per cent inflation before fuel prices hike.

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On Thursday, BI also held unchanged its overnight deposit facility rate, known as Fasbi, at 5.75 per cent and lending facility rate at 8 per cent.

BI targets 2015 and 2016 inflation to return to Indonesia's normal range of around 3 to 5 per cent.