Bank Indonesia likely to keep interest rate on hold

The Indonesian central bank is set to meet this week for its interest rate decision. According to a DBS Bank research report, Bank Indonesia is expected to keep its key interest rate on hold at 4.25 percent. While inflation accelerated in December, it is expected to stay within the official 2.5 percent-4.5 percent target in 2018.

The main focus of the central bank is to avert excessive market volatility, as seen by the persistent build-up in the foreign reserves in 2017. In the meantime, the trade data for the month of December is expected to show import growth coming in strong again at 16.8 percent year-on-year, as domestic demand has continued to rebound into 2018.

“We expect the trade balance to still be in surplus of US$0.3b in the month, given strong commodity exports”, added DBS Bank. 

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