Bank Indonesia holds key rate at 7.75%

[JAKARTA] Indonesia's central bank kept its policy rate at 7.75 per cent as expected on Thursday, saying the level is consistent with efforts to keep inflation under control after a fuel price hike.

In mid-November, Bank Indonesia (BI) raised the benchmark rate 25 basis points at an unscheduled meeting after the government raised fuel prices.

At Thursday's meeting, the last scheduled one in 2014, BI also kept its overnight deposit facility rate, known as Fasbi, at 5.75 per cent and the lending facility rate at 8 per cent.

Seventeen of 18 analysts in a Reuters poll had predicted Bank Indonesia would hold the policy rate at 7.75 per cent.

Annual inflation spiked to 6.23 per cent in November from 4.83 per cent the previous month, after fuel prices were raised by more than 30 per cent effective Nov 18.

Bank Indonesia recently said inflationary pressure would peak in December, when it predicted month-on-month inflation would go up to 2-2.2 per cent and annual inflation would reach 7.7-8.1 per cent.


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