Indonesia Halts Interest Rate Hikes, Holds at 5.75%

The Reason for the Freeze Is the Judgment of "Stabilization in the Inflation Trend"

[Asia Economy Reporter Hyunju Lee] The Bank of Indonesia (BI) has halted its interest rate hikes after seven months.

On the 16th, following a monetary policy meeting, BI kept the 7-day reverse repurchase agreement (RRP) rate, which serves as the benchmark interest rate, steady at 5.75%.

The rate, which was 3.75% last August, had risen for six consecutive months until last month. In particular, from September to November last year, it increased by 0.5 percentage points each month for three consecutive months.

BI Governor Perry Warjiyo had indicated at a press conference after raising the benchmark rate by 0.25 percentage points last month that the rate had already reached a "sufficient" level, signaling a pause in future rate hikes.

BI was able to hold the rate steady because the inflation trend had stabilized. The consumer price inflation rate peaked at 5.95% in September last year and began to gradually ease, falling to 5.28% last month.