Indonesian central bank keeps rate unchanged to guard rupiah

JAKARTA, May 19 (Xinhua) -- The Indonesian central bank on Tuesday held its key rate steady, albeit the economy is stretching deep and inflation is benign, as it aims to safeguard rupiah amid the global economic fallout caused by the novel coronavirus disease (COVID-19) pandemic.

The rate-setting meeting of the Indonesian central bank, Bank Indonesia, held the seven-day repurchase rate at 4.5 percent, despite high pressure for loosening policy, Governor of Bank Indonesia Perry Warjiyo said.

"This decision is made on the back of the necessity for maintaining the rupiah stability amid the global uncertainty," Warjiyo remarked.

"Bank Indonesia sees rooms for loosening policy as inflation is low, and the need of accelerating the economic growth," he cited.

According to Warjiyo, Bank Indonesia preferred to use other instruments to shore up the economy which has been stretching deep, saying that liquidity injection is more effective.

The lender has set aside 508 trillion rupiah (some 34.27 billion U.S. dollars) stimulus on the economy and is ready with other capital injections when needed, he said.

Bank Indonesia has twice trimmed its key rate by 50 basis points this year.

Indonesia's economic growth tumbled to 2.97 percent in the first quarter and for the whole of this year it is estimated to plunge to 2.3 percent from 5.02 percent last year.

The stay-at-home call amid the physical distancing rules has been keeping millions of people cooped up for weeks and ravaging economic activities.