BI Keeps Benchmark Overnight Rate at 6.75 Pct

JAKARTA - Bank Indonesia Tuesday decided to keep its benchmark overnight rate unchanged at 6.75%, but reaffirmed it remains open to raising borrowing costs in the future if inflationary pressures pick up again.

“The decision doesn't change Bank Indonesia's tightening bias for monetary policy,“ Bank Indonesia Gov. Darmin Nasution said after the rate-setting meeting. “Bank Indonesia still sees that the risk of inflationary pressures remains high in the future.“

Fifteen of 16 regional economists polled earlier by Dow Jones Newswires expected the central bank to stand pat again after inflation eased in March. The Statistics Agency reported Friday that the on-year inflation rate fell to 6.65% in March from 6.84% in February.

From a month earlier, the consumer price index fell 0.32%, after rising 0.13% in February, as the prices of basic food commodities declined during the harvest season. Most analysts expect the central bank to deliver at least another 25-basis-point rate increase later this year as inflation is expected to start picking up again when the current harvest season is over.

Nasution said that Bank Indonesia in May will extend the mandatory minimum holding period for its Sertifikat Bank Indonesia notes to six months from one month currently in order to discourage short-term fund inflows, which Bank Indonesia expects to remain strong this year.

The move came after the International Monetary Fund last week said that a series of policies implemented by Bank Indonesia since June last year haven't deterred fund inflows.

source : kompas.com