Indonesia keeps interest rate unchanged

Indonesian central bank on Thursday held its benchmark interest rate steady as it aims to spur economic growth and keep stability of capital flows.

The governor board meeting decided to hold the 12-month benchmark rate at 6.75 percent and left the seven-day reverse repo, which will become the new benchmark on August 19, at 5.5 percent.

That was in line with the forecasts of 5 of the 7 economists surveyed by Xinhua, while the rest projected a 25 basis points cut.

The lender also held deposit facility rate and lending facility rate respectively at 4.75 percent and 7.25 percent, Agus Martowardojo, governor of the central bank, said at the bank headquarters.

"This is still in line with the inflation target of the central bank, and aims to keep stability of capital flows,"Andry Asmoro, economic analyst of the state's largest bank Mandiri, told Xinhua.

The lender expects inflation at 4 to 5 percent range at the end of this year. The country's current account deficit gap at the first quarter widened to 5.67 billion U.S. dollars, according to the lender.

The central bank aggressively cut its benchmark rate by 75 basis points to 6.75 percent in first quarter before it applied a pause in easing policy in April as the lender wanted to see the effect of its rate cut.

Indonesia's economic growth is expected to accelerate to 5.2 to 5.6 percent this year, according to the central bank. Enditem