Analysts: BI Rate Maintained, Inflation Controlled

TEMPO.CO, Jakarta - Morgan Stanley economist Deyi Tan said the decision of Bank Indonesia board of governors to maintain the benchmark interest rate at 7.5 percent is consistent with the effort to control the inflation rate of 4.5 percent, plus minus one percent, in 2014.

“The policy is also consistent with the effort to reduce the current account deficit,” Deyi said on Saturday, September 12, 2014.

Another Morgan Stanley economist Zhixiang Zu said BI can continue its monetary and macro-prudential policy mix to bolster the domestic economic structure. Zhixiang added that BI must also improve its coordination with the government in terms of policy to ensure that the inflation rate and current account deficit are in line with the economic improvement process.

Earlier, BI board of governor decided to maintain BI Rate at 7.5 percent; and lending facilities and deposit facilities at 7.50 percent and 5.75 percent, respectively.

Bank Indonesia’s communications department executive editor Tirta Segara said the policy was based on the adjustment to a more balanced economic structure, reflected by controlled domestic demands and decreasing inflation rate. However, the current account deficit is in a rising trend due to seasonal pattern of the second quarter of 2014.

AYU PRIMA SANDI