Indonesia's central bank kept its benchmark interest rate unchanged for a fifth consecutive month as easing inflation gives policy makers room to assess the risk of a slowdown in global growth.
Bank Indonesia maintained its reference rate at 6.75 per cent, it said in Jakarta yesterday. The decision was predicted by all 14 economists surveyed by Bloomberg News.
Inflation in Southeast Asia's biggest economy eased to a 12-month low in June as a 4.8 per cent gain in the rupiah this year helped cap import costs. That has allowed central bank Governor Darmin Nasution to extend Indonesia's pause in monetary tightening as Europe's debt crisis and slowing US growth threaten Asia's exports, even as neighbours from Thailand to India and China kept raising rates.
"Monetary policy doesn't need to respond," Destry Damayanti, chief economist at PT Bank Mandiri in Jakarta, said before the monetary policy decision. "Not only has headline inflation eased, core inflation was also relatively stable in the last few months."
Indonesia's benchmark stock index has surged more than 30 per cent in the past year on optimism the central bank's restraint in raising rates will help support growth and bolster earnings at companies including PT Bank Mandiri.
The Jakarta Composite index rose above 4,000 for the first time on July 8. Bank Mandiri shares advanced to a record and PT Astra International, the largest automotive retailer, climbed 3 per cent, leading gains among banks and consumer stocks.
From / Gulf News