JAKARTA: Indonesia’s central bank held its benchmark rate at a record low on Thursday as it sought to keep monetary policy accommodative amid a rise in Covid-19 cases and maintain stability in the rupiah currency. Bank Indonesia (BI) kept the benchmark 7-day reverse repurchase rate at 3.50% for a fourth straight meeting, as unanimously expected in a Reuters poll.
Governor Perry Warjiyo reiterated a pledge to keep interest rates low and liquidity abundant until inflation rises, which he expects to happen in early 2022 at the earliest. Annual inflation remains below BI’s 2% to 4% target.
He said it was too early to worry about a change in US monetary policy, even as the Federal Reserve began closing the door on its pandemic-driven monetary policy. Previous talk of US tapering triggered capital outflows, hurting Indonesia’s currency. “Measures that we will take are to optimise stabilisation efforts for the rupiah exchange rate and coordinate with fiscal authorities so that the impact on bond yields is within fair limits,” said Warjiyo .