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Indonesia keeps interest rate unchanged despite of slower growth

English.news.cn   2013-02-12 16:43:33            

JAKARTA, Feb. 12 (Xinhua) -- The Indonesian central bank keeps its benchmark interest rate unchanged for a twelfth month in a raw although the GDP accelerated at a slower pace in the fourth quarter. Weakening rupiah against the U.S. dollar and inflation pressure ease the opportunity for issuing a stimulus.

The bank governor board meeting on Tuesday decided to hold the basic rate known as BI rate at 5.75 percent, as it considered that the economic growth remains strong despite it slowed at 6.11 percent in the final quarter from 6.17 percent at the previous quarter, the bank said in a statement.

For the whole year, the GDP slowed at 6.23 percent in 2012, lower than 6.5 percent in 2011, the statistic bureau has said. Weakening rupiah against the U.S. dollar due to continuing trade deficit made the bank cautious over the country's imports which exceed the exports, but the bank still see the inflation remain in check, between its target of 3.5 percent to 5.5 percent in 2013 and 2014.

"The level of BI rate is considered remain consistent with the inflation pressure which is still under control and inline with the target of inflation in 2013 and 2014," the bank said in the statement.

Indonesia is facing increasing pressure from higher electricity tariffs and rising minimum wages. Besides, weakening rupiah has risen cost for imports.

Inflation rose 4.5 percent in January on yearly basis, after climbing 4.3 percent in December, the bureau said on Feb. 1.

"The Bank Indonesia (central bank) considers that the Indonesian economy still shows a strong performance, but still alert on the high pressure of external balance along with high import amid slowing global economy," the bank said.

Indonesia trade balance has been deficit in the last several months last year due to rising oil imports cost as subsidies-oil- consumption hike and the purchase of planes, but the deficit was narrowed in December as volume of exports rose, though the value remain law as the global price of the commodity is still weak, according to the national statistic bureau.

The deficit narrowed to 155 million U.S. dollars in December from 610 million U.S. dollars in November, but for the whole of last year it reached at 1.63 billion U.S. dollars, the bureau said.

Going forward, the central bank would strengthen policies to push the external balance that the trade deficit can be lowered, it said.

"The central bank will keep stability of rupiah in line with its fundamentals," the bank said.

Rupiah weakened by about six percent last year and in January, rupiah weakened on average of 0.22 percent to 9,654 per one U.S. dollar, the bank said.

Indonesian central bank foreign exchange reserve decreased to 108.8 billion U.S. dollars at the end of January or equal with 5.9 month imports and payment of foreign debt, from 112.78 billion U.S. dollars at the end of December, the bank said.

Editor: Hou Qiang
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