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Indonesia central bank holds key interest rate at 7.50%

Indonesia's central bank held its benchmark interest rate at 7.50 per cent Thursday after recent signs that Southeast Asia's top economy is stabilising following a tumultuous 2013.

JAKARTA: Indonesia's central bank held its benchmark interest rate at 7.50 per cent Thursday after recent signs that Southeast Asia's top economy is stabilising following a tumultuous 2013.

Bank Indonesia had raised rates by 175 basis points between June and November after the stock market and rupiah plunged amid speculation that the United States would taper off its stimulus programme.

Domestic woes added to the turbulence, with inflation almost doubling after a fuel price rise and the current account widening to a huge deficit.

However, the bank stood pat Thursday following positive recent signs. Inflation is steady at just above eight per cent and the trade surplus surged to $1.52 billion in December, its highest level for two years.

Bank Indonesia governor Agus Martowardojo told reporters he believed rates were already high enough to bring inflation down in the coming months, and the current account deficit had decreased "to a healthier level".

Economic growth slowed to 5.78 per cent in 2013, with some analysts blaming the aggressive cycle of monetary tightening for hitting consumer spending power.

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