The Indonesian central bank surprisingly hiked its benchmark interest rate for a sixth time this year on Thursday over widening deficits in trade balance and current account.
The rate-setting meeting of the Bank Indonesia, decided to edge up seven-day reverse repo rate by 25 basis points to 6 percent, extending the tightening cycle applied by the lender to 175 basis points since May 17.
"The decision is in line with the effort to edge off current account deficit to a safe level," Governor of the central bank Perry Warjiyo said.
Although the country's current account deficit remains in a safe level of 2.86 percent of the GDP, below the threshold of 3 percent of the GDP, it still has indicated an uptrend in the second and the third quarters with 3.02 percent and 3.37 percent of the GDP respectively.
Warjiyo said the Bank Indonesia would be "ahead of the curve," in anticipation of another rate hike by the U.S. Federal Reserve to make the domestic financial market more attractive.
The national statistics bureau said Thursday that the country's trade balance swung to a 1.82-billion-U.S. dollar deficit in October from a surplus of 230 million U.S. dollars in September.
Warjiyo said that the lender revised its growth target to 5.1 percent this year, from last month's forecast of 5.0 to 5.4 percent.
The rate-setting meeting of the Bank Indonesia, decided to edge up seven-day reverse repo rate by 25 basis points to 6 percent, extending the tightening cycle applied by the lender to 175 basis points since May 17.
"The decision is in line with the effort to edge off current account deficit to a safe level," Governor of the central bank Perry Warjiyo said.
Although the country's current account deficit remains in a safe level of 2.86 percent of the GDP, below the threshold of 3 percent of the GDP, it still has indicated an uptrend in the second and the third quarters with 3.02 percent and 3.37 percent of the GDP respectively.
Warjiyo said the Bank Indonesia would be "ahead of the curve," in anticipation of another rate hike by the U.S. Federal Reserve to make the domestic financial market more attractive.
The national statistics bureau said Thursday that the country's trade balance swung to a 1.82-billion-U.S. dollar deficit in October from a surplus of 230 million U.S. dollars in September.
Warjiyo said that the lender revised its growth target to 5.1 percent this year, from last month's forecast of 5.0 to 5.4 percent.
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