Bank Indonesia Likely to Hold Rates Steady

Bank Indonesia is likely to again delay raising its policy interest rate when it meets Tuesday because of easing inflation in March. Fifteen of 16 regional economists polled by Dow Jones Newswires expect Bank Indonesia to keep its benchmark rate at 6.75%.
The official Statistics Agency reported Friday that inflation was 6.65% on year in March, easing from 6.84% in February. On month, March inflation was 0.32% less than in February, when it edged up 0.13% over January.
The agency said inflation eased somewhat because prices of basic food commodities fell during the harvest season, which usually runs from March to May.
March “inflation data apparently strengthens the case for BI to not hike its benchmark policy rate when they meet on Apr 12.“ Bank Danamon economist Helmi Arman said in a research note. Arman expects the central bank to lift the rate by 25 basis points in June or July after the harvest season ends.
Bank Indonesia Governor Darmin Nasution recently said the current harvest will keep inflation at “comfortable levels“ in April and May, suggesting the central bank won't rush to raise lending rates despite its statement last month that it is still open to such a measure should it become necessary.
Many analysts expect the central bank to deliver a 25-basis point hike later this year as inflation is expected to pick up again after the harvest season ends. Bank Indonesia last month kept its policy rate unchanged after a percentage-point rise in February.