JAKARTA :Indonesia's central bank on Tuesday kept its benchmark interest rates unchanged for a third straight meeting, predicting headline inflation would be back within its target sooner and after the rupiah currency strengthened significantly.
Bank Indonesia left the 7-day reverse repurchase rate unchanged at 5.75 per cent, as expected by all 30 economists polled by Reuters. It also kept steady its two other policy rates. "Last month inflation was already at 4.9 per cent, this will continue easing ... We believe that starting August, it could be below 4 per cent," he said, referring to the headline inflation rate in March of 4.97 per cent which was the lowest in seven months.Meanwhile, with sentiment for riskier assets improving amid market forecasts that U.S. rates were near their peak, the rupiah has strengthened by almost 4 per cent in the past month, even with some depreciation this week.
Nicholas Mapa, senior economist at ING, said trends were pointing to a potential shift in BI's tone in coming months as inflation moderates and the rupiah is helped by foreign inflows.
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