* Benchmark kept at 4.75 pct, its level since October
* C.bank says monetary stance remains neutral
* Inflation rate seen peaking in June
* Rupiah, stock market shrug off Fed rate hike
By Nilufar Rizki and Hidayat Setiaji
JAKARTA, June 15 Indonesia's central bank, in a
policy decision hours after the Federal Reserve raised U.S.
interest rates, on Thursday left its benchmark interest rate
unchanged, saying the current level still fits efforts to
maintain stability and support growth.
Bank Indonesia (BI) kept the 7-day reverse repurchase rate
at 4.75 percent, as expected by all 18 analysts in
a Reuters poll.
The decision came shortly after the Fed raised United States
interest rates for the second time in three months, and said it
would begin cutting its bond holdings this year.
In the past, Fed tightening moves have sometimes triggered
outflows from emerging markets such as Indonesia.
On Thursday, the rupiah barely moved and the
Indonesian stock market edged down slightly.
Indonesia took the Fed rate hike "in its stride", Capital
BI has said it is now in a better position to weather any
external shocks. At the end of May, foreign exchange reserves
were at a record high of $125 billion.
On Thursday, BI still listed changes in Fed policy as among
the biggest global risks it is monitoring, along with the
aftermath of the United Kingdom elections and developments with
Dody Budi Waluyo, executive director of economic and
monetary policy, said BI's policy stance remains neutral.
"We won't change our interest rate stance as long as there's
no sign that... inflation expectations are pointing to pressures
to core inflation," he said.
The rupiah has been stable in recent weeks. Annual core
inflation eased in May, although the headline reading was at a
14-year high of 4.33 percent.
In the Reuters poll this week, some analysts said BI will
hold the key rate throughout 2017, while others expect a hike by
The World Bank earlier on Thursday said that by keeping its
benchmark unchanged, "overall monetary conditions have
temporarily become even more accommodative relative to second
half of 2016 as the real interest has inched down due to
moderately higher inflation."
Last year, BI trimmed its benchmark six times by a total of
150 basis points to try to boost lending and economic growth. It
has also relaxed some lending rules to encourage banks to expand
Southeast Asia's largest economy grew 5 percent in 2016, the
first increase in six years, despite a soft rate in the fourth
In the first three months of this year, annual growth picked
up only a touch, to 5.01 percent, but the government has been
increasingly optimistic, with the finance minister forecasting
5.3 percent this year.
BI's outlook for growth this year remained the midpoint of
its 5.0-5.4 percent range, the central bank said. Its 2018
projection is 5.1-5.5 percent.
(Additional reporting by Gayatri Suroyo and Fransiska Nangoy;
Editing by Richard Borsuk)