Indonesia keeps benchmark rate at 4.75 pct despite rising price pressure, global uncertainty

Indonesian central bank on Thursday kept its benchmark interest unchanged although inflation is expected to rise ahead of Islamic fasting month and the prospect of the U.S. Fed. Reserve upcoming policies remains hawkish.

The bank governor board meeting decided to hold seven-day reverse repo rate at 4.75 percent despite demand of foods and clothes is projected to increase prior to Islamic fasting month of Ramadhan that falls at the end of this month.

"This decision is in line with the central bank's efforts to maintain the stability of macro-economy and financial system," Governor of the bank Agus Martowardojo said at the bank headquarters.

The board meeting agreed to keep deposit facility rate and lending facility rate respectively 4 percent and 5.5 percent, he said.

Inflation in April rose 4.17 percent from a year earlier, compared with 3.61 percent in March, according to the national statistics bureau.

Retail sales is expected to significantly grow 5.4 percent this month on year compared with 4.2 percent last month, according to a survey conducted by the central bank.

The central bank had applied the longest easing policy last year and has kept refraining from raising its basic rate since months ago, amid the threat of capital outflows following the unveil of U.S. policies which support the Fed. Reserve plan to raise rate twice this year.

The Southeast Asia's largest economy gave a good signal of growth at the first quarter by registering 5.01 percent growth, primarily contributed by shipment of commodities, the major exported product from Indonesia, amid rising global oil prices.

A huge capital inflows and rising foreign exchange reserve of the central bank help the lender to postpone tightening policy. Endit