Indonesia’s central bank kept its main interest rate unchanged for a second month, refraining from easing policy as inflationary pressures reappear.
Governor Agus Martowardojo and his board kept the reference rate at 7.5%, Bank Indonesia said in Jakarta on Tuesday.
Twenty out of 21 economists surveyed by Bloomberg News had predicted the decision, while one forecast a cut. The authority also held the rate it pays lenders on overnight deposits, known as the Fasbi, at 5.5%.
Bank Indonesia joins peers in Singapore, Australia and India in pausing after easing policy earlier in 2015, as the US Federal Reserve considers raising rates this year.
Limiting scope to cut borrowing costs in Southeast Asia’s largest economy are a current-account deficit that has hurt the rupiah, and a pick up in inflation in March that could accelerate as the Ramadan festive season starts in mid-June.
“Inflation risks are on the upside ahead of Ramadan,” Bharti Bhargava, a Singapore-based regional economist at advisory firm Forecast, said before the decision. “The external situation with the US talking about hiking its monetary policy is also impacting this decision.”
The rupiah was little changed at 12,988 a dollar as of 3.37pm in Jakarta, according to prices from local banks. The currency has lost more than 4% against the dollar this year to be the region’s worst performer after the ringgit, according to data compiled by Bloomberg.
The central bank also held the lending facility rate at 8%.