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Indonesian central bank keeps rates on hold

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Indonesian central bank keeps rates on hold

Indonesia's central bank decided to keep its benchmark interest rate on hold, saying that its policy stance is sufficient to support the domestic economic recovery momentum and ensure the stability of the financial system.

Bank Indonesia's board of governors held the seven-day reverse repo rate at 4.25%. The deposit facility and lending facility rates were maintained at 3.50% and 5.00%, respectively, effective March 23.

Annual consumer price inflation remained within the 3.5% plus or minus 1% target band at 3.18%. Core inflation eased, which in turn helped to moderate headline inflation. The central bank said that it expects inflation to remain within the target range in 2018, underpinned by strong policy coordination between the monetary authority and the government, primarily in anticipation of potential pressures from volatile food prices.

The country's economy is expected to grow between 5.1% and 5.5% annually in 2018 on the back of rising government investment and consumption, stable private consumption and strong export performance. Bank Indonesia said that it will continue to monitor the risk of global financial market uncertainty brought about by monetary tightening in advanced economies. The central bank also said that it will implement exchange rate stabilization measures to safeguard the rupiah's fundamental value and maintain market mechanisms.