By Ying Xian Wong

Indonesia's central bank stood pat at its June policy meeting as expected, aiming to keep inflation in check as well as to maintain the rupiah's stability.

Bank Indonesia on Thursday kept its benchmark seven-day reverse repo rate at 6.25%. All six economists polled by The Wall Street Journal had expected the decision.

The central bank also held its overnight deposit facility rate at 5.50% and its lending facility rate at 7.0%.

The decision is consistent with the bank's pre-emptive, forward-looking stance to ensure inflation remains under control and to strengthen the rupiah, Bank Indonesia Gov. Perry Warjiyo said at a press conference Thursday.

Indonesia's growth remains strong despite global uncertainty, supported by the central bank and the government's policies, the governor said. The central bank forecasts 2024 growth at 4.7% to 5.5%, and it will continue to cooperate with the government on stimulus as well as macroprudential policies, he added.

Further, the rupiah has maintained its stability in accordance with Bank Indonesia's intervention, he said. Foreign capital inflows, attractive yields, low inflation and robust growth could also lend support to the currency, he said.

Bank Indonesia said consumer and core inflation should remain within the target range of 1.5% to 3.5% in 2024, as there remains significant capacity in the economy.

Looking ahead, the Indonesian central bank is expected to "stay patient and proceed with care" even with the possibility of a Federal Reserve rate cut in September, in order to be more certain that the rupiah can stabilize sustainably, Barclays economist Brian Tan said in a note.

Tan continues to expect Bank Indonesia to start cutting rates in the first quarter of next year, and estimates cuts of 25 basis points per quarter until the policy rate reaches 5.0%. He acknowledges there are significant risks associated with this projection due to the rupiah's volatility.

Meanwhile, Capital Economics economists Gareth Leather and Ankita Amajuri, who expect the Fed to cut in September, think Bank Indonesia could follow suit in October.

The rupiah could get a boost against the dollar as expectations for a Fed rate cut gather steam, Capital Economics added.

Write to Ying Xian Wong at

(END) Dow Jones Newswires

06-20-24 0614ET