* 2013 GDP growth forecast now 6.2-6.6 pct
* C.bank expects inflationary pressures to ease
* Overnight facility rate also left unchanged
By Rieka Rahadiana and Adriana Nina Kusuma
JAKARTA, April 11 (Reuters) – Indonesia’s central bank held its benchmark rate at a record low 5.75 percent as expected on Thursday and slightly lowered its growth forecast for 2013.
The rate has been unchanged since February 2012.
A Reuters poll of 14 analysts had expected the rate would be kept unchanged, particularly as core inflation eased in March even as headline inflation rose because of higher food costs.
Bank Indonesia (BI) did not change the overnight deposit facility rate, known as Fasbi. Some analysts expect it to soon raise that rate to support the rupiah.
The central bank said it now projects Indonesia to have economic growth of between 6.2 and 6.6 percent this year, versus a previous forecast for 6.3 to 6.8 percent. Bank Indonesia (BI) said the prospects for global economic recovery aren’t as optimistic as before.
Gundy Cahyadi, economist at OCBC Bank in Singapore, said BI’s statement “seemed a little more dovish than usual, and certainly the downward revision to 2013 GDP growth forecast… was a clear indication that the central bank would continue to maintain their accommodative policy as long as they can”.
Indonesia’s exports have been “somewhat disappointing” in the first two months of the year and it seems like the recovery expected in the second half may now be delayed, he said.
EASING INFLATION PRESSURE?
The central bank’s hold was announced hours after the Bank of Korea surprisingly kept South Korea’s base rate unchanged, contrary to wide expectations for a cut to boost the sluggish economy.
BI said inflationary pressures “are expected to ease in line with government efforts to cope with food supply disruption and the harvest season.”
In March, Indonesia’s annual headline inflation rate was 5.9 percent, above the central bank’s target range of 3.5-5.5 percent for the end of 2013.
Some economists say BI should start raising interest rates to cool inflationary pressures and support the rupiah, which last year was emerging Asia’s worst performing currency, weakening about 6 percent against the dollar. This year, the rupiah has weakened about 0.7 percent.
Worries over higher prices and costly fuel subsidies have built up inflation expectations in Indonesia, keeping some pressure on the rupiah.
The government is expected to announce a policy designed to cut spending on fuel subsidies, although an announcement has already been postponed twice.
Indonesia, Southeast Asia’s largest economy, last year saw spending on fuel subsidies swell to 221 trillion rupiah ($ 22.74 billion) from the budgeted 137.4 trillion rupiah.
Indonesia, which used to be a net oil exporter, now is a net importer. Increased fuel demand was one factor causing the country to have its first annual trade deficit in 2012.
Data from the statistics bureau showed the value of imports petrol products was $ 2.6 billion in February, up 3.5 percent from the previous month.
“Bank Indonesia has chosen not to be pre-emptive, despite the dangers of an inflation overshoot from fuel prices,” said Chua Hak Bin, economist at Bank of America Merrill Lynch in Singapore.
($ 1 = 9,720 rupiah) (Additional reporting by Andjarsari Paramaditha; Editing by Neil Chatterjee and Richard Borsuk)
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UPDATE 1-Indonesia c.bank holds policy rate, cuts GDP forecast
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