Bank Indonesia keeps rate steady after surprise hike in April
Analysts reckon a rate cut down the road remains a distant possibility as the rupiah has slid 3.5% this year
[JAKARTA] The recent stability of the rupiah has provided Indonesia’s central bank with the leeway to maintain its benchmark interest rate on Wednesday (May 22), following an unexpected hike last month.
Bank Indonesia (BI) kept its benchmark interest rate steady at 6.25 per cent, a move that was expected by 38 economists polled by Reuters, after a surprise hike by 25 basis points last month in a move to shield the rupiah from the strong dollar.
Alvin Liew, economist at UOB Group, believes that April’s sudden rate hike will likely be the last for BI this year. This forecast is supported by Indonesia’s effective inflation management and BI’s proactive efforts to stabilise the rupiah exchange rate.
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