BI Maintain 7.5 % Interest Rate

 BI Maintain 7.5 % Interest Rate

Bank Indonesia ( BI ) on Thursday kept its benchmark rate at 7.5 % level .

The interest rate " consistent " with the 2014 inflation target of between 3.5 % and 5.5 % . In addition , the level of interest rates is also in line with the target current account deficit reached a healthier , according to the Executive Director of the Department of Communication BI , Difi Johansyah .


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Eight of 11 regional economists polled by The Wall Street Journal predicts BI kept interest rates . Why , the economy is still slowing . In addition , the trade balance recorded a surplus of $ 42 million in October from a deficit of $ 803 million for September .

Last month shocked the BI market , when to raise interest rates by 25 basis points . BI reason when it is to facilitate the narrowing of the current account deficit . The move is also in anticipation of easing bond-buying program estimate by the U.S. central bank .

Ballooning current account deficit to boost capital outflows in mid-2013 . The deficit also helped weaken the exchange rate , which this year dropped more than 19 % against the dollar .

But in the third quarter , the deficit narrowed to $ 8.45 billion or 3.8 % of gross domestic product ( GDP ) . The deficit fell from $ 9.95 billion in the second quarter . BI is projecting the deficit will amount to 3.4 % of GDP .

Since June, the central bank has raised interest rates by 175 basis points . A number of economists and corporate executives had urged the central bank to keep interest rates . Therefore , further increases could hinder growth .

Indonesia's economic growth was at the slowest pace in three years . GDP grew by 5.62 % on an annual basis in the third quarter , compared to 5.81 % for the previous three months .