Bank Indonesia sees no policy move if CPI in target


JAKARTA • Bank Indonesia sees no reason to adjust monetary policy if inflation and the currency remain in line with its forecasts, assistant governor Dody Budi Waluyo (picture) said.

Inflation is still within the central bank’s target and the currency is stable, Waluyo said on a panel at Bloomberg’s Year Ahead Asia Conference in Jakarta yesterday.

“As long as our inflation expectations as well as our exchange rate expectations remain within our projections, then we will not change our policy rate,” he said.

The central bank has kept its benchmark interest rate unchanged at 4.25% following eight reductions since the beginning of last year — the most recent in August and September. It’s scheduled to make the next policy decision on Dec 14. Inflation slowed to 3.3% in November and the bank’s target band is 3% to 5%.

Economic growth has been disappointing this year and the central bank will aim to keep inflation “as low as possible” to help boost consumers’ purchasing power, Waluyo said.

With the Federal Reserve (Fed) leading global central banks in tightening monetary policy, central bankers in Indonesia are turning their focus to the currency which may come under pressure as the dollar strengthens.

“At this time, our policy rate is sufficient to ensure our future inflation expectation is within the target for this year and 2018,” Waluyo said after the conference panel.