The central bank also decided to keep the lending facility and deposit facility rates unchanged at 7.50 percent and 5.75 percent, respectively.Jakarta (ANTARA News) - Bank Indonesia (BI) has decided to maintain its key rate at 7.50 percent, which is still consistent with an inflation target of 4.5 percent plus minus one percent, in 2014.
The decision was also consistent with the effort to lower the current account deficit to a healthier level, Bank Indonesias communication affairs director Tirta Segara said here on Thursday.
The central bank also decided to keep the lending facility and deposit facility rates unchanged at 7.50 percent and 5.75 percent, respectively.
Tirta said BI believes the economic adjustment process is on the right track, although it still needs to take steps to ensure that the target inflation rate can be achieved and the current account will improve.
To that end, BI will strengthen a mixture of monetary and micro-prudential policies to cement the domestic economic structure and to manage foreign debts, particularly of corporates, he added.
In addition, it will also coordinate with the government to control the inflation rate and the current account deficit, he pointed out.
According to BI, the inflation rate in May was still manageable due to the correction of several food prices and a stable core inflation rate.
Consumer price index (IHK) in May showed that inflation was 0.16 percent month-on-month or 7.32 percent year-on-year, up slightly from -0.02 percent month-on-month or 7.25 percent year on year, in the prior month.
Compared to April, the core inflation rate was relatively stable at 0.23 percent in May, fueled by low global commodity prices amid the rupiahs weakening against the dollar.
The volatile food inflation experienced a deflation albeit at a slower pace compared to the previous month, fueled by abundant red chili supplies.
However, the administered price inflation rose slightly in May due to the public transport fare hike.(*)
Editor: Heru Purwanto
Copyright © ANTARA 2014
