Indonesia cbank holds benchmark rate steady as expected
JAKARTA Jan 10 (Reuters) - Indonesia's central bank kept its benchmark policy rate unchanged as expected on Thursday, at a record low of 5.75 percent for the 12th month, with inflation relatively low and economic growth still strong despite global weakness.
All 17 economists polled by Reuters had expected the policy rate to be left unchanged to support Southeast Asia's largest economy, as it faces current account and trade deficits which are adding fresh pressure to the already weakened rupiah.
Three economists expected Bank Indonesia (BI) to start raising the benchmark rate from June in response to inflation risks, but most saw no increase until after the first year.
However, most economists expected BI to start raising the deposit facility rate, or FASBI, in the first half from the current level of 4 percent.
December annual inflation softened to 4.3 percent, from 4.32 percent a month earlier, well within central bank's target range of 3.5-5.5 percent last year.
The government expected the economy to expand by 6.3 percent in 2012 on buoyant domestic demand and investment. However, weak demand from major trade partners have hit the country's exports, resulting in a trade deficit of $480 million in November.
Announcement date Rate (percent)
Bank Indonesia's last rate cut was 25 basis points (bps) in February 2012, following 75 bps of cuts in 2011.
While the economy showed resilience in the face of the global downturn last year, recent economic data indicates Indonesian consumers are growing less confident due to concerns over jobs and wages. Retail sales grew at a slower pace in November despite discounting by stores ahead of the holiday season.
Growth of broad money supply, or M2, slowed in November to 17.4 percent from a year ago, according to data from Bank Indonesia.
The rupiah has weakened more than 1 percent against the dollar this year, after falling nearly 6 percent last year. LINKS:
- BI rate details ..........................
- Central bank website ............... www.bi.go.id
(Reporting by Rieka Rahadiana and Adriana Nina Kusuma; Editing by Neil Chatterjee)