(RTTNews) - Indonesia's central bank left its benchmark rate unchanged on Thursday after an unexpected quarter-point hike in October to curb the fall in the rupiah currency.
The Board of Governors of Bank Indonesia, led by Governor Perry Warjiyo, decided to hold the seven-day reverse repo rate at 6.00 percent.
The central bank has raised the key rate by 250 basis points in the current tightening cycle that began in August 2022.
The deposit facility rate was retained at 5.25 percent and the lending facility rate at 6.75 percent.
"The decision remains consistent with the policy of stabilizing the Rupiah exchange rate from the impact of high global uncertainty, and as a pre-emptive and forward-looking step to mitigate the impact on imported inflation," Bank Indonesia said in a statement.
With growth likely to struggle and inflation set to remain weak, the next move in interest rates will be down, but this is unlikely to happen until the second quarter of next year, Capital Economics' economist Gareth Leather said.
"In the coming months, BI will likely be keeping an eye on the currency and imported inflation dynamics, with the central bank likely remaining open to additional tightening should the IDR come under substantial pressure," said ING economist Nicholas Mapa.
The central bank said it will strengthen the rupiah stabilization efforts to control the imported inflation.
At 2.56 percent, inflation in October remained within the central bank's target of 2-3 percent. The bank aims to keep inflation within 1.5-3.5 percent next year.
Official data showed that Southeast Asia's largest economy posted its weakest growth in two years in the third quarter on falling government spending and exports.
GDP rose 4.94 percent after expanding 5.17 percent in the second quarter.
Bank Indonesia forecast the economy to grow in the range of 4.5-5.3 percent in 2023.
Growth is expected to improve next year driven by the strength in consumer confidence and the positive influence of the General Election, the bank said.
