Bank Indonesia try to hold interest rate

Bank Indonesia may refrain from another interest-rate increase after a hike this month as other efforts to tame inflation should be sufficient.

While rising oil prices will have an impact on inflation, the government’s suggestion to delay a planned cut of subsidized fuel sales and a “declining trend” in food costs mean consumer prices may rise as little as 0.5 percent in February from the previous month.

Bank Indonesia raised its reference rate by a quarter-point to 6.75 percent on Feb. 4, after inflation climbed to a 21-month high. It had previously resisted raising rates, seeking to curtail more foreign capital inflows by opting instead to increase lenders’ reserve requirements and tightening rules on banks’ foreign-exchange holdings to curb price advances. The central bank is due to decide on whether to hike rates or let them stand on March 4.