JAKARTA, April 12 (Reuters) - Indonesia's central bank kept its benchmark interest rate at 6.75 percent on Tuesday, as expected, after a surprise 25 basis point increase in February and no change in March.
March annual inflation slowed to 6.65 percent as food prices eased, helped by the start of the country's main rice harvest, leading economists to forecast that interest rates would stay at 6.75 percent on this occasion.
Announcement date Rate (percent)
Indonesia's central bank had been expected to leave interest rates unchanged at its meeting on April 12 as annual inflation slowed to 6.65 percent in March (from 6.84 percent in February), as the main rice harvest began. It usually runs until May and June.
Analysts say inflation should remain in check for a while and give the central bank room to hold rates at 6.75 percent, after a surprise 25 basis point rise in February aimed at calming the market, which had been worried about inflation, although firm oil prices may have a knock-on effect.
Indonesia's statistics bureau has said inflation may ease in April, as the government has scrapped import duties on rice, wheat and soybeans, while the central bank has let the rupiah strengthen to help bring down imported inflation.
Analysts forecast Bank Indonesia will raise rates to 7 percent by the end of this quarter and to 7.5 percent by the year-end to dampen inflation in Southeast Asia's largest economy.
Rising oil prices may force the government to implement a plan to cut fuel subsidies for private cars, which has been delayed, or increase the retail price of subsidised fuel sometime in the second quarter, pushing up inflation.
Bank Indonesia has said it will adjust its benchmark rate, used as a reference by banks to set lending rates, in stages in a timely manner to support an economy seen growing by 6.4 percent this year.
- BI rate details ..........................
- Central bank website ............... www.bi.go.id (Reporting by Aditya Suharmoko and Adriana Nina Kusuma)