Indonesia’s central bank is expected to keep its benchmark interest rate unchanged on Thursday (18/05) despite what some analysts call a weak start for economic growth in 2017, a Reuters poll showed.
All but one of 20 analysts surveyed predicted Bank Indonesia (BI) will hold the 7-day reverse repurchase rate at 4.75 percent, where it has been since October.
The other analyst thinks BI will cut the benchmark 25 basis points to support growth. In the first 10 months of 2016, BI cut the key rate six times.
BI Governor Agus Martowardojo has described the central bank’s policy stance as “neutral”. He earlier said BI’s focus was stability.
In the first quarter, Southeast Asia’s largest economy had annual growth of 5.01 percent. The rate was broadly in line with analyst forecasts, but better than what BI expected.
In April, Indonesia’s annual inflation rate hit a 13-month high of 4.17 percent, largely due to a hike in some electricity tariffs.
The government has said it will delay any price increases until after the Muslim festival of Idul Fitri at the end of June to try to help inflation stay in BI’s 3-5 percent target range.
Out of 10 analysts in the poll who gave a forecast for the key rate at the end of the year, two penciled in rate hikes. The rest saw BI holding the benchmark throughout 2017.