Indonesian central bank on Thursday kept its benchmark interest rate unchanged to protect economic growth from the weakening of global economy amid higher inflation pressure this year.
The central bank governor council meeting decided to keep the rate at 5.75 percent after cutting it by 25 basis points on Feb. 9, the bank said in a statement.
Indonesia inflation was forecast to accelerate by up to 7.9 percent this year should the government raise oil price by 1,500 rupiah (some 0.164 U.S. dollar) per litter on April 1, Halim Alamsyah, deputy governor of the bank said on March 2.
Indonesia economy was forecast to grow slower this year after accelerating to 6.5 percent last year, the highest since 1996, as the uncertainty in the settlement of the debt crisis in Europe trimmed demand of commodities from emerging economies.
The statistic agency reported on March 1 that Indonesia's export had indicated a trend of decrease in the past months. The weakening of the global demand prompted Indonesia to cut export target this year to 203 billion U.S. dollars from the initial 230 billion dollars, Trade Minister Gita Wirjawan said on Wednesday.
The shipping of goods from Indonesia had decreased to 15.49 billion dollars in January from 18.81 billion dollars in August, but the trade surplus in January increased to 920 million dollars from 858.5 million dollars in December due to slowing imports, the agency said.
The central bank foreign exchange reserve rose to 112.22 billion dollars at the end of February from 111.990 billion dollars at the end of January, the bank said in a statement.
Analysts have said that the central bank needed to central the amount of the liquidity at the same time with protect growth from the weakening global economy.
The huge domestic consumption and growing investment were expected to make up loss from the slowing exports.
The country's credit rating upgrade status to investment grade by Moody's Investor Services at mid-January and Fitch's rating agency in mid December help foreign capitals coming into the country although it has not been maximal due to the investor concerns on the debt crisis in Europe.
On fiscal policy, Indonesia was likely to widen budget deficit to about 2.2 percent this year, Coordinating Minister for Economy Hatta Rajasa said./.