Indonesian central bank holds benchmark rate steady at 7.5%

Indonesian central bank on Thursday announced to keep its benchmark interest rate unchanged at 7.5 percent for a third consecutive month as pressure on inflation eases and trade balance picks up amid a good prospect of economy. The bank also held its lending facility unchanged at 7.5 percent and deposit facility rate at 5.75 percent, it said in a statement. "The policies remain consistent with the tight monetary policy to direct inflation at target of 3.5 to 5.5 percent in 2014 and 3 to 5 percent in 2015, as well as to push down current account deficit to a healthy level," the bank said. Indonesia economy expanded slightly by 5.72 percent in the final quarter last year compared with 5.6 percent in the third quarter, the national statistic bureau has said, indicating that the largest economy in Southeast Asia withstood the global turmoil hitting emerging markets. "Going forward, Bank Indonesia (the central bank) will persist keep on eye over the risks resulted from the global economy, especially the impacts of the normalization of the Fed policy ( tapering off) and slowing down of China's economy," the bank said. "The central bank would continue ramping up combination of monetary policy and macro-prudential policy, and proceed effort to deepen market, as well as to bolster coordination with the government in controlling inflation and current account deficit," it said. The bank aspires the economy to expand at the lower level of range of 5.8 to 6.2 percent this year as against 5.8 percent last year, the lowest in four years. The bank foresees inflation to accelerate at range of 3.5 to 5. 5 percent this year, slower than 8.37 percent last year. Indonesia trade balance has demonstrated a trend of improvement by chalking up 1.52 billion U.S. dollar in December, after registering 776.8 million U.S. dollar in November and 50 million U. S. dollar in October, according to the national statistic bureau. On Wednesday, Deputy Trade Minister Bayu Krisnmurthi said that he was upbeat over trade balance, saying that export was likely to be surplus this year despite slapping on broad mineral ores export ban on Jan. 12. The central bank rose the basic rate aggressively by 1.75 percentage points last year to help attract jaded investors, as the U.S. tapering off plan soured them on emerging markets, and slow economic growth. Nevertheless, weaker rupiah currency against U.S. dollar helped scaling up in shipments of products overseas by 7.4 percent in the fourth quarter on year that helped expanding growth in the quarter.