TEMPO.CO, Jakarta – David Sumual, an economist with Bank Central Asia (BCA), said Bank Indonesia (BI) would maintain its benchmark interest rate (BI rate) at 7.5 percent as the inflation expectations were still in keeping with earlier predictions at 4.5 + - 1 percent.
David added the decision to maintain the BI rate was also based current account deficit issues. “Under the circumstances, BI's tight monetary policy will still continue until the end of the year,” David told Tempo.
David said he also saw economic uncertainties both in the domestic and global markets, which were also the reasons why BI opted to keep its rate. He added among the causes of the uncertainties were the obscurity of fuel subsidy and the rise in the US interest rate.
"These are the strongest external factors that trigger uncertainties in the economies of developing countries," he said.
BI held Thursday a monthly board of governors meeting that discussed various monetary policies, including the BI rate. If the BI rate stays, September 2014 will become the 11th month for BI to maintain its benchmark interest rate at 7.5 percent.