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Indonesia prolongs halt in key rate increases

Publication Date : 13-06-2014

 

Bank Indonesia (BI) held its key interest rate for a seventh straight meeting, citing risks from the global economy as growth slows.

Governor Agus Martowardojo and his board maintained the reference rate at 7.5 per cent, the central bank said in Jakarta on Thursday. It also kept the deposit facility rate unchanged at 5.75 per cent.

Indonesia’s growth has been restrained by interest-rate increases last year that curbed investment and a mineral-ore export ban that hurt the mining industry.

Southeast Asia’s largest economy is also struggling to narrow a current-account deficit driven by oil product imports, prompting both candidates for president to pledge fuel-subsidy cuts.

“We expect the current account to remain contained as the slowdown in the economy continues to drag on imports,” Gareth Leather, Asia economist at Capital Economics Ltd., said in a note after the decision. “BI’s focus is instead likely to shift towards supporting growth.”

The benchmark Jakarta Composite Index of stocks fell 0.8 per cent at the close, trimming earlier losses after the rate decision. The rupiah rose 0.2 per cent to 11,788 per dollar as of 5.17pm local time, prices from local banks show.


 

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