Central bank set to keep rates at current levels

Central bank set to keep rates at current levels

Bank Indonesia said on Friday that it will maintain interest rates around current levels to achieve an inflation target of between 5 percent and 6 percent this year.

The weighted average of Bank Indonesia's 1-month Sertifikat Bank Indonesia (SBI) promissory notes fell to 7.32 percent in an auction Wednesday from 7.33 percent two weeks earlier, and the 3- month SBI rate dropped to 7.24 percent from 7.25 percent.

The central bank said that although on-year inflation in April picked up to 5.92 percent from 5.11 percent in March, price increase this year are expected to remain within its target range.

"In the next months, Bank Indonesia will maintain its cautious monetary policies in order to achieve its medium and long-term inflation target," the central bank said in a press release after a monthly board of governors' meeting late Thursday.

It added that it will "closely watch" the possibility of an increase in the U.S. federal funds rate, which could put pressure on the rupiah.

Meanwhile, to maintain rupiah stability, Bank Indonesia will continue intervention, and intensify monitoring of banks actively involved in the currency market.

The rupiah has recently been under pressure due to the dollar's rise against the yen, and rising concerns over securities ahead of July presidential elections.

It has traded at Rp 8,720 to the dollar early Friday, or around 3.4 percent lower than its level at the end of last year at Rp 8,420. -- Dow Jones