Indonesian central bank keeps rate steady at 7.5 pct

The Indonesian central bank on Thursday held its benchmark interest rate unchanged at 7.75 percent for the second time as it is still consistent with the effort to reach the inflation target amid healthy current account deficit.

The lender rose the rate by 25 basis points to 7.75 percent shortly after President Joko Widodo's decision to raise subsidized- fuel prices by nearly 31 percent effective on Nov. 18.

The bank decision was made following the significant hike of inflation to 8.36 percent in December, from 6.23 percent in November and 4.53 percent in October.

The bank expected inflation this year and next year to reach the range of 3 to 5 percent.

The bank also kept its overnight deposit facility rate and lending facility rate respectively at 5.75 percent and 8 percent, it said in a statement.

Scores of external factors still pose challenges for Indonesia' s economic stability in 2015, including high volatility of the global financial market which is in line with the possibility of a rise in the Fed interest rate and drop in global commodity prices.

The bank forecast Indonesia's GDP in 2014 to go down to 5.1 percent from 5.8 percent in 2013, due to the country's weakening export and ban on export of unprocessed minerals.

For this year, the bank forecast the economy to grow at the range of 5.4 and 5.8 percent due to strong consumption, investment and development of infrastructure facilities. Endi