The lending and the deposit facility rates were also increased by 25bps to 5.25 percent and 3.75 percent respectively.
Policymakers noted that the rupiah depreciated 1.47 percent in the first quarter of 2018 and 1.06 percent in April, sparked by global USD appreciation and that the exchange rate was managed according to domestic economic fundamentals and appropriate stabilization measures. The central bank stated that it will continue to monitor the risk of global financial market uncertainty by continuing the exchange rate stabilization measures in line with the rupiah’s fundamental value.
Domestic economic growth increased in the first quarter of 2018, backed by increasing investment (highest in five years) and resilient private consumption. Also, the current account deficit narrowed to 2.1 percent of GDP from 2.3 percent in the last quarter of 2017. As so, Bank Indonesia anticipates a controlled current account deficit in the 2.0-2.5 percent of GDP range in 2018, remaining within a safe threshold of not more than 3 percent of GDP.
Both growth (5.1-5.5 percent) and inflation (3.5±1 percent) forecasts for 2018 were kept unchanged.