Indonesian central bank on Thursday kept interest rate unchanged after cutting it in two straight months to ease inflation pressure as rupiah depreciates.
The central bank governor council meeting on Thursday decided to keep the rate at 6.00 percent following its decision of cutting the basic rate by 75 basis point in Sept. and Oct. after keeping it on hold for more than two years, the bank said in a statement. "The central bank decides today (Thursday) to keep the interest rate at the level of 6.00 percent. The decision was made based on the overall economic performance, the risks being faced and the prospect of future economy," the bank said in the statement.
Indonesia's rupiah has fallen from 8,996 against one U.S. dollar in Sept. 1 to 9.085 per one U.S. dollar on Dec. 8, according to the central bank data, threatening to give more pressure of imported inflation amid the continuing European debt crisis.
Indonesian central bank has said that it would intensify intervention on currency market and bond market.
Analyst from CIMB Niaga bank Winang Budoyo has said with higher inflation expectation prior to Christmas and New Year, and next year, it was appropriate not to trim the interest rate. "The central bank would be better to refrain from decreasing the rate and keeping it on hold rater than to cut it and increase it again next year for the possibility of increasing inflation rate," he has told Xinhua by phone.
Indonesia's month-on-month inflation in Nov. rose to 0.34 percent after reaching 0.12 percent in Oct., as some food prices and gold prices had started to rise as the people would celebrate the Christmas and New year, the Statistic Bureau said on Dec.1.
Indonesia's inflation was forecast to end at below 4.5 percent this year, head of the Bureau Rusman Heriawan has said. For the next year inflation was forecast at 3.5 percent to 5.5 percent, the central bank has said.
The central bank forecasts the economy is going to grow at 6.5 percent at the fourth quarter that the growth at the entire of this year reach 6.5 percent.