Indonesia Holds Key Interest Rate

(RTTNews) - The Bank Indonesia left its key interest rate unchanged on Wednesday as inflation rose to the highest level in more than a year.

The board, led by Governor Perry Warjiyo, decided to hold the BI rate at 4.75 percent. The decision came in line with expectations.

The bank had reduced the benchmark rate by 125 basis points thus far this year. The current level of 4.75 percent is the lowest since October 2022.

The deposit facility rate was maintained at 3.75 percent and the lending facility rate at 5.50 percent.

The bank said it will continue to monitor the scope for further interest rate reductions with inflation forecast for both 2025 and 2026 seen within the target range of 1.5 percent to 3.5 percent. This will also help to contribute to higher economic growth.

Official data showed that consumer price inflation rose to 2.86 percent in October from 2.65 percent in September. This was the highest since April 2024.

Despite inflation pressures and rupiah weakness, the Bank Indonesia is set to cut the rate in December to support economic growth, ING economist Deepali Bhargava said. "Risks remain skewed toward delays if currency pressures persist or the Fed postpones easing," the economist added.